About The Consumer Law Office of Steve Hofer

Steve Hofer has been practicing consumer law in Indiana for more than 20 years. He is a former Indiana State Chairperson of the National Association of Consumer Advocates, a national organization of attorneys striving for fairness in the consumer marketplace. Contact me by phone at 317-662-4529 or via email at hoferlawindyATgmail.com. You can also leave a message through my website at www.hoferlawindy.com.

Tuesday, December 26, 2017

Memories of a 20-year-old subprime auto case

When researching for a current case, I found a Chicago Tribune article from 1997 about a case I was working on back then concerning finance charges hidden in the price of subprime auto contracts.  Subsequent court decisions has made this type of case much harder to bring, but the practice still continues at dealerships across the country.  You shouldn't be charged a higher price for merchandise when purchased on credit than cash buyers - or if you are, the credit premium should be disclosed as a finance charge.

Be on the lookout for car dealers that have a separate inventory just for buyers with problem credit.  The reason this inventory is separate is the prices are much higher, and the reason the prices are higher is to get around statutory interest rate caps.  Because it is hard to bring these cases successfully, your only remedy may be to not get into the deal in the first place.  A contract to buy these cars at inflated prices can plunge you into debt that you can't get out of and choke the financial life out of you.

Beware, the minute you come inside a dealership that advertises it can help you with your credit, you will be targeted by professionals who know how to take your money.  If you pay three times what a vehicle is worth, for the entire contract period you are really depending upon that vehicle being trouble-free. All too often the vehicle konks out, and you will have to swallow all the negative equity. Often this is too much, and bankruptcy is the unavoidable result. 

Thursday, November 9, 2017

Analysis of Two Months of Nextgear Filings - Only 7% of defendants hired an attorney

We just completed an analysis of two months of suits filed by Nextgear Capital, Inc. in Hamilton County, Indiana. Nextgear filed 127 cases.  Of those cases, only 9 defendants hired an attorney. Six hired an assortment of other attorneys, and three hired us.  Only seven percent of Nextgear defendants hired an attorney. Of the cases where attorneys weren't hired, Nextgear started moving for default judgments roughly 6 weeks after the suits were filed.  We believe that ultimately, Nextgear will move for default judgments in all the cases where they received service of process but where the defendant didn't answer the complaint or file an answer.

This analysis reaffirms our conclusion that it it is imperative for a dealer sued by Nextgear to hire an attorney and answer the complaint.    Simply by hiring an attorney, you place yourself in the top 10% of defendants, and you take yourself off of the fast track to judgment.  I believe that no matter what attorney you choose, you are likely better off than not hiring an attorney t all.  I believe, however, that Keith Hagan and I have the most experience in handling defense claims to Nextgear cases.  We have attempted to price our services so that dealers can afford them.  Call us at 317-662-4529 if you are sued by Nextgear Capital, Inc.

Thursday, October 26, 2017

The case of Great Seneca's Ghost Continues

A year ago, my co-counsel Keith Hagan and I were interviewed by WRTV-6 reporter Kara Kenney regarding the case we filed against Asta Funding et al, a case that internally we call "The Case of Great Seneca's Ghost", alleging the defendants are attempting to collect judgments in the names of dead companies.

Kara did an excellent story on the case under a short deadline. Here's the link.

http://www.theindychannel.com/news/call-6-investigators/call-6-lawsuit-alleges-violations-of-fair-debt-collection-practices-act


Apparently ABC affilliates share the videos of their local stories, because Action News in Tampa Bay Florida picked up the story, used the WRTV video, but they also looked and confirmed that there are cases in the Tampa area involving the same thing.

http://www.abcactionnews.com/money/consumer/taking-action-for-you/beware-of-debt-collectors-posing-as-companies-that-no-longer-exist

We are currently investigating cases in Florida and Hawaii involving renewed judgments in the names of the dead (dissolved) companies.

If you have a judgment against you in the names of any of the companies below, be advised that you might have a defense against payment, in some cases (but sadly not all), even if you have paid or the funds have been garnished, you might have the right to get some or all of the money returned to you.   Here is the list of companies:

Great Seneca Financial Corporation
Platinum Financial Services Corporation
Monarch Capital Corporation, Colonial Credit Corporation
Centurion Capital Corporation
Sage Financial Corporation
Hawker Financial Corporation

You may have received, or you may receive a notice that your wages are being garnished or yoru bank account has been attached based on a judgment by these companies. You may find that you get a notice saying one of these companies is trying to renew an old judgment.  If any of this happens to you, call my office at 317-662-4529.  We can give you information over the phone, and if necessary, we can give you a referral to an experienced NACA consumer lawyer.







Friday, October 13, 2017

The Relationship between Nextgear and Manheim Auctions - Dealers Are Complaining

I have fielded a number of complaints about the interaction between dealer floorplanning company Nextgear Capital and Manheim Auctions.  Both Nextgear and Manheim are units of Cox Enterprises, Inc.

To give you some perspectives: in the modern-day car business, buying and selling vehicles at auctions is essential.  Because of the marketplace nature of auctions, once an auction becomes entrenched in an area, it is a natural monopoly.  Even the largest markets might have only one or two working auctions.   According to Wikipedia, Manheim is the largest vehicle auction company in the world, with 145 locations worldwide.

Nextgear Capital, the dealer financing division of Cox Enterprises, doesn't hold the same dominant position as Manheim, but in localized areas may be the only financing alternative, and whether it is the only option available to a dealer, once the dealer signs up, the dealer can be utterly dependent on having a functional relationship with Nextgear.

Because my firm defends dealers who are sued by Nextgear, I hear a lot of complaints by dealers who are unhappy with Nextgear's policies and practices.  They have complained about the fees, complained that vehicles were floorplanned that weren't requested, complained that inventory was repossessed without default, and several have complained that when there is a dispute with Nextgear, the dealership gets frozen out of the auto auctions, especially Manheim, but not even limited to Manheim.  Of course, I realize in the course of fielding these complaints, I am hearing only one side of the story.  There may be facts that I don't even know about. That being said, Nextgear filed over 1,000 suits in Hamilton County, Indiana in the past year.  If you are a dealer who is behind with Nextgear, and you can't get things resolved with their collection department, it is a reasonable guess that you will be sued in Indiana.

I started with a working theory that IF Nextgear, a company that probably would not be considered to have monopoly power for purposes of antitrust law, conspires with Manheim, a company which might be held to yield monopoly power, to refuse to let a dealer participate in an auction, that could be conceivably be an illegal vertical tying arrangement pursuant to antitrust law.  After coming up with that theory, I reached the conclusion that as a private attorney, it doesn't look like even if the facts can be proven, and that's a big if, neither my firm, nor my clients would be able to finance a private antitrust action.  I'm putting this theory out in a public forum for anybody who reads it to look into the facts and into the law, and go further if warranted.This theory may have some bugs and has not been tested in court

What that means is that if you are a dealer who is reading this and has a complaint about an unfair trade practice with Nextgear, you should consider making a formal complaint with the Federal Trade Commission, the federal agency with jurisdiction over the antitrust law.  You can file your complaint here.  If the FTC doesn't think the complaint is meritorious, it will go nowhere.  If the complaints build up, and if the FTC thinks there could be a violation, the FTC could take action.

By the way, even if Nextgear does not violate antitrust law, that doesn't mean that any action taken by Nextgear would be shielded from any scrutiny.  Unfair and deceptive acts are also regulated under the Federal Trade Commission Act as well as some state UDAP laws.  There is a covenant of good faith and fair dealing in every contract under the Uniform Commercial Code, and if a company intentionally and unjustifiable acts to prevent a company from dealing with a third party, there is a tort called intentional interference with business relations.  In addition, if you are a dealer whose vehicles are repossessed and those vehicles are resold in a commercially unreasonable way, you may have a defense to deficiency claims by the floorplanner.  If you are sued by Nextgear, you should not necessarily assume that everything Nextgear claims from you is owed, no matter how high the claimed balance, and you shouldn't assume that there is nothing you can do to get the balance down.  My firm regularly defends dealers from lawsuits brought by Nextgear in Indiana.  We will talk to you on the phone with no obligation to hire us.  317-662-4529.  

Good News and Bad News Relating to CFPB Payday Loan and Auto Title Loan Regulation

The CFPB has proposed a final rule that prohibits a lot of the worst practices in the Payday Loan industry as well as practices involving Auto Title Loans and other abusive loans.  These regulations are primarily intended to get people out of the "debt trap" that happens when you are forced to roll over payday loans.  The regulations include limits on roll-over, includes a provision that the lender must consider the borrower's ability to pay, and it includes a provision that subsequent loans must be in a declining amount.  There are other provisions that prohibit multiple attempts to deposit dishonored payment checks, a practice which can generate ridiculous NSF fees. 

All of that is good news. Now the bad news: The rule doesn't go into effect unitl July 2019 at the earliest. In the current political climate that means that lender funded special interest groups have over a year and a half to go after the rule in Congress.

In the meantime, payday loans are covered to the greater or lessor degree by state legislation. Indiana (my home state) actually has a pretty good law.

Here is information on the CFPB Payday Loan Rule from National Consumer Law Center.  If you are stuck in a bad situation regarding payday loans or other high interest loans, find a consumer attorney near you through the National Association of Consumer Advocates here

Sunday, October 1, 2017

Body Attachments for Small Claims Court Cases - Are they allowed?

One of the most troubling cases that I've seen in a long time involved a report of a mistaken identity body attachment arising from a small claims court case in Gary City Court, a small claims case in Lake County, Indiana (near Chicago). We have seen bench warrants issue in Gary City Court for debts as trivial as failure to return a rented videotape.  What is a body attachment? Effectively, a body attachment is an arrest warrant. Can you be sent to jail for not paying a small claims judgment?

Both federal and state law prohibits imprisonment over a civil debt. In the federal law, 28 USC 2007 prohibits imprisonment for failure to pay a debt. In state law, Article 1, Section 20 of the Indiana Constitution states:



Debts--Imprisonment ExemptionThe privilege of the debtor to enjoy the necessary comforts of life, shall be recognized by wholesome laws, exempting a reasonable amount of property from seizure or sale, for the payment of any debt or liability hereafter contracted: and there shall be no imprisonment for debt, except in case of fraud.

Despite these laws, people are arrested for failure to pay civil debts fairly frequently. This is done under the auspices of civil contempt. Contempt is an ancient doctrine allowing, among other things, people to be detained if they fail to show up to court proceedings as ordered.  In the context of civil debts, "body attachments" or a court order to seize a person, are sometimes issued when a civil judgment defendant fails to show up for a "proceeding supplemental", that is a scheduled court hearing to determine what assets are available to pay a judgment.  Consequently, the order of arrest is not for failure to pay the debt. It is for failure to show up in court.  This may be a distinction without a difference though in cases where the judgment defendant doesn't get the order to appear, doesn't understand the order to appear, or can't get to the place they are ordered to appear. 

Rarely does the court send someone out to get you if you have a body attachment ordered over a civil judgment. Instead, what is more likely to happen is the order gets logged into the computer system of a local law enforcement agency, and if they stop your or arrest you for something else, the outstanding bench warrant pops up, and the next think you know, you are detained in jail for that video you didn't return, or MAYBE didn't return, 5 years ago.  You can be detained up to 48 hours not-counting weekends and holidays that the court is closed.  In the case of a three-day weekend, this can mean up to a 5 day stint in jail. 

Though body attachments may be legal in enforcing civil judgments, often creditors and debt collectors, including attorneys, often threaten body attachments in circumstances where the threat is false or misleading. Consequently, if you receive a communication from a debt collector, and your are located in Indiana, or if it relates to an Indiana judgment, we would love to hear from you. Call us at 317-662-4529.  FALSE THREATS OF BODY ATTACHMENTS MAY VIOLATE THE FAIR DEBT COLLECTION PRACTICES ACT, AND MAY GIVE YOU THE RIGHT TO SUE FOR DAMAGES - EVEN IF YOU OWE THE UNDERLYING DEBT.  There may be other laws that are violated as well. 

If you are outside of Indiana, contact the attorney referral service of the National Association of Consumer Advocates  to find a consumer attorney near you.

You should be aware that even if you owe a judgment, every state has exemptions relating to property or wagest that can't be seized (or garnished) by creditors.  For more information about exemptions in Indiana, here is a brochure put out by Indiana Legal Services

You should also be aware that in many cases filing bankruptcy can stop a garnishment or proceeding supplemental in its tracks.  You can find a consumer bankruptcy attorney near you through the National Association of Consumer Bankruptcy Attorneys (NACBA), and their referral page is here

Sunday, September 10, 2017

Does Equifax Deserve the Death Penalty?

This week it was disclosed that Equifax had its database hacked and the hackers ran off with personal information, including social security numbers of 143 million Americans, roughly half the adult population in the United States.  Not only that, but Equifax hid the breach for several days, and executives sold stock before the disclosure, thereby benefiting from inside information.

To make matters worse, once Equifax disclosed the breach, it tried to shaft consumers again. If you want to check to see if your information is affected, you have to give Equifax the last 6 digits of your social security number and give up your right to sue.

As the New York Times points out in an editorial, Equifax had one job, one job that it failed miserably.  The credit bureaus say that their computer systems can track each time a consumer's credit file is accessed.  The hackers here got into 143 million files ove ra two week period.  That's roughly 10 million per day.  If that didn't raise red flags at Equifax, it should have.

If I had anything to do with it, I would shut Equifax down completely - the corporate death penalty. Nothing else will suffice for a breach like this.

Tuesday, August 1, 2017

We Just Won an Award!

We just won an award - Worlds ugliest blog.

Okay, I made that up.  Sorry, nothing to see here.  Move along.

Monday, July 31, 2017

Report of Wells Fargo Charging 800,000 Customers for Unneeded Car Insurance

If you are a Wells Fargo Bank customer, I have one question for you: WHY?  Why are you still a customer of this bank which has gotten in trouble for cheating it's customers repeatedly.

In September 2016, Wells Fargo was fined $185 million for opening millions of accounts without customers' knowledge or permisssion.  (This incident was imortalized in a Saturday Night Live skit below - until the link breaks.)


In June 2017, Wells Fargo was accused of making improper changes to customer Mortgage accounts in bankruptcy.

In 2016, Wells Fargo was included in a group of 14 banks implicated in a scheme to rig the LIBOR interest rate benchmark to which some of its variable rate loans were tied.

These are just scandals over the last two years involving conduct that Wells intentionally engaged in to line its pockets to the harm of its customers.

There's a new one though.  I want to put it in perspective.  In a month the Big 10 football season will start. This year there eleven home games in the opening week in the conference, with a total attendance of around 800,000 spectators. Now, imagine those 11 filled football stadiums. THAT'S HOW MANY CUSTOMERS WELLS FARGO CHARGED UNNECESSARY FORCED PLACED AUTO INSURANCE ACCORDING TO RECENT ALLEGATIONS.  Wells has announced a plan to repay $80,000 to 570 million customers.  Repaying the insurance after getting caught isn't the big problem. The biggest problem is perhaps 25,000 customers had their vehicles repossesed where the repossession was traced to delinquencies caused by the improper lender placed insurance.  To be fair, Wells Fargo places the repossession count caused by the problem at 20,000.  Now to put that in perspective, 20,000 people would almost fill up Madison Square Garden.  25,000 is Madison Square Garden's seats filled plus 4,000 crowded onto the basketball court.  Each of these people lost their transportation and maybe their jobs in some cases because of Wells Fargo's contempt for its customers.

My office has opened one case involving a repossession of a Wells Fargo loan where the borrower was charged for lender-placed insurance.  If you are an Indiana resident, we would be happy to evaluate your case please contact my office at 317-662-4529.  If you live outside of Indiana, I suggest you find an attorney through the National Association of Consumer Advocates "Find an Attorney" webpage, linked here.


Friday, July 28, 2017

There's No Magic Solution to An Underwater Car Loan

Do you owe more money on your vehicle than what it's worth?  There's no magic solution to the problem. If you don't beliee me, believe Jalopnik.

If you have a vehicle that you need to get rid of and you owe less than $5000 more than what it's worth (wholesale), you might be able to finance the negative equity into a new caar loan.  Very important:  shop only for new cars if you are going to do this, and you might have to settle for a car that is in very low demand, the kind of car that you could get $5,000 off MSRP.  Last year, I would have said the primary contender would be the Chrysler 200 (but that car is discontinued now).  I don't know what vehicle is rotting on dealer lots now.  The Chrysler 200 wasn't really a BAD car, it just wasn't as good as the competition.

DON'T ROLL A NEGATIVE BALANCE ON A PREVIOUS VEHICLE INTO ANOTHER USED VEHICLE LOAN.

If your finanical situation is really bad, and you are a wage earner, you can look at a Chapter 13 bankruptcy. In a chapter 13 bankruptcy, your car loan can be written down to the actual value of the car.  Chapter 13 bankruptcies aren't free though, so there are a lot of factors to consider. This blog post is no substitute for bankruptcy advice from a bankruptcy lawyer.

Monday, July 17, 2017

NATIONAL COLLEGIATE STUDENT LOAN TRUST - NCSLT - PER NYT $12 BILLION IN STUDENT LOANS MAY BE UNCOLLECTABLE - But Suits Against Borrowers Continue

Today the New York Times published an article titled: As Paperwork Goes Missing, Private Student Loan Debts May Be Wiped Away. This article finally brings out in the public what consumer lawyers have been noticing for months and even years, that National Collegiate Student Loans Trusts has problems proving that the borrowers and cosigners that it sues actually owe the money claimed. Moreover, sometimes NCSLT can't prove that it is even entitled to collect on the loan at all.  

Here's a quote from the NYT article:

At the center of the storm is one of the nation’s largest owners of private student loans, the National Collegiate Student Loan Trusts. It is struggling to prove in court that it has the legal paperwork showing ownership of its loans, which were originally made by banks and then sold to investors. National Collegiate’s lawyers warned in a recent legal filing: “As news of the servicing issues and the trusts’ inability to produce the documents needed to foreclose on loans spreads, the likelihood of more defaults rises.”
National Collegiate is an umbrella name for 15 trusts that hold 800,000 private student loans, totaling $12 billion. More than $5 billion of that debt is in default, according to court filings. The trusts aggressively pursue borrowers who fall behind on their bills. Across the country, they have brought at least four new collection cases each day, on average — more than 800 so far this year — and tens of thousands of lawsuits in the past five years.

If you are a borrower with a NCSLT loan what should you do?  Well, the answer isn't completely simple. The problem is that if you are sued, you might have problems finding and affording a lawyer. Very few lawyers take student loan defense cases, and those who do (including me) have to charge an out of pocket fee for the defense - much like a criminal defense lawyer charges an out of pocket fee even to innocent clients.  This fee, however, is going to be a lot less than what NCSLT is claiming.

To find a consumer attorney who handles student loan debt defense in your area, go to the National Association of Consumer Advocates (NACA) "Find an Attorney" page linked here.

Sunday, July 16, 2017

Alfa Romeo Giulia - Problems in the Press Fleet

If you were a carmaker, and you provided vehicles to the automotive press for them to write about how great your car is, wouldn't you go over the press cars with a fine-toothed comb to make sure that the press vehicles are the best possible vehicles you can make and in tip-top conditions?

Well, there are signs that FCA is providing Alfa Romeo Giulias to the press corps that aren't exactly trouble free. Car and DriverConsumer Reports, Carbuzz, and Jalopnik have all reported problems.  Check out this article in Jalopnik, or this one at Carbuzz.

Back in 2008, on the old Top Gear show, Jeremy Clarkson hit the nail on the head regarding Alfa Romeos when he said:

 "Alfa builds a car to be as good as a car can be....briefly."   

The last time I saw reliability warning signs like this from the trade press, it was the Cadillac Catera, and that car was a depreciation nightmare for its owners.  

FCA is advertising a $299 lease on the Alfa Romeo, and if you are attracted to the concept of getting a sporty Italian car for the price of a boring domestic, by all means lease one.  If you buy one, you need to be familiar with your state's lemon law.  In Indiana, if a vehicle is int he shop for 30 days or more in the first 18 months or 18,000 miles OR 4 or more repair attempts for the same problem and the problem still exists,  it qualifies for lemon law protection.  If you are an Indiana buyer or lessee and you end up with a lemon, please feel free to call me at 317-662-4529.  If your car qualifies under the lemon law, you should get your choice of a buy-back (adjusted for mileage) or replacement plus your attorney fees paid by the manufacturer.

By the way, I get a lot of calls by buyers of older cars who think their car is a lemon.  The lemon law (in Indiana) only applies to vehicles that go bad in the first 18 months or 18,000 miles after they are delivered to the FIRST buyer.  This means that most used cars are NOT lemons, so you don't get the same remedies.

Friday, July 7, 2017

TCPA - The best way to revoke your consent to get robocalls

Probably THE hot area in consumer law right now is the TCPA, the Telephone Consumer Privacy Act.  Among other things, the TCPA prohibits auto-dialed calls to personal cell phones for commercial purposes without prior written consent, and each call that violates the TCPA can bring damages of $500-1500.

One of the thorniest issues involves consent and revoking consent. Many times people give consent in boilerplate contracts, paper or online clickboxes, often without realizing it.  It is clear, however, that once you give consent, you can revoke it. Per FTC guidelines, you can revoke consent orally or in writing in any reasonable manner.

When people are getting calls I generally recommend that they first revoke consent orally, with some prof that they did it, for example by recording your call where you revoke consent. (Technically you can always record a call if you live in a "single party consent state". If you live in one of the few dual party consent states, recording the call may violate a wiretapping statute.) Another option is to put the call on speaker phone and have a witness listen to you call revoking consent and make "contemporaneous notes".  I've never actually had anyone do this though.

What do you say to revoke consent? "Don't call me anymore."  If you want to get technical, "I hereby revoke my consent for you to call me."

After revoking consent orally on the phone, I urge people to write to the company calling and  revoke it in writing.  The challenge sometimes is to find the right address to write. There are cases where  consumers  thought they were revoking, but because the letter didn't get to the right subentity, they lost their case.  For example, the consumer who sued Target card, which was owned by TD Bank, but the consumer faxed their revocation to the wrong departments at TD Bank.  As a general rule, you can send your revocation to the address given on a statement for correspondence. I personally believe that you can send your revocation to the registered agent of a corporation in your state, IF the corporation whose agent you are sending it to is the same corporation that is calling you.  This is one that I haven't tested out yet.  Oral revocation followed by revocation by certified mail to registered agent has a lot of promise for maximizing damages, however. After oral revocation is ignored, the calls after oral revocation stand a good chance of qualifying for maximum damage of $1,500 per call for willful violations. The delay in communications received by the registered agent to the operating office of the company will generally result in calls that are received afte

If you are an Indiana resident who is receiving robocalls to your cell phone, or if you are receiving unsolicited fax advertisements (another TCPA violation), I urge you to call me at 317-662-4529. There is another major area of prohibition under the TCPA, telemarketing calls to home telephones on the do-not-call list. Unfortunately, these days, those calls tend to be placed by scammers that have carefully insulated themselves from lawsuits, and in my experience, not even 1 out of 100 of these calls can be practically sued upon.

Sunday, July 2, 2017

Even the New York Times is talking about a rise in Auto Repossession Lawsuits

From this article in the New York times, it seems like the reporter is amazed to find that lenders are suing borrowers for deficiencies arising out of automobile repossessions.  Those of us in the consumer law trade are not surprised at all. We have seen the rise in subprime lending and a rise in post-repossession deficiency lawsuits.

The New York Times singled out Credit Acceptance Corporation as a frequent filer of court cases relating to vehicle reposessions.  That is true in Indiana. From 6/30/2016 to 6/30/2017, Credit Acceptance Corporation filed 404 cases in Indiana according to my search of the state mycase court datavase.  That's well more than one case a day. Behind each of these cases is a sad story.

In my opinion, you will never stop repossessions completely as people sometimes face unexpected hardships in paying a loan. What I think we can cut back on are repossession sales where virtually nothing is received for the vehicle. If you have had a vehicle repossessed, you should be aware that if the vehicle is not sold in a commercially reasonable manner after repossession, you may not have to pay the balance of the loan, but you will probably need a lawyer ot enforce your rights.  If you are sued for a deficiency after an auto repossession, you should call a NACA consumer lawyer in your area. You can find one with this link.

Thursday, June 15, 2017

Are you receiving Telemarketing Calls from Yodle? - ROBOCALLS

Are you receiving automated telemarketing calls from a company called Yodle? These calls, with an automated voice greeting are almost certainly autodialed and subject to the restrictions of the TCPA (Telephone Consumer Privacy Act.)  The TCPA allows you to go claim $500 to $1500 in damages for all auto-dialed calls to your cellphone (or residential landline if you are on the "do not call" list) if the calls were made without your express permission.  I received two calls from this company; however the calls I received were to my Google Voice number which might not be covered by the TCPA. If you receive calls from this company, please call a consumer lawyer in your area. You can find one at www. consumeradvocates.org.

Thursday, June 1, 2017

What's all this fuss about the KO book that Auto Auctions use?

I'm trying to understand the "KO Book" that is used to exclude dealers from participation from auto acutions.  Who provides information? To whom is it provided? What information is provided?  Is there an electronic database involved? Is personal financial information included?  Please call me at 317-662-4529 or email me at hoferlawindyATgmail.com. Thanks.

Sunday, May 28, 2017

What Donald Trump can learn from SNL and Gary Johnson

It has often been said that Donald Trump wanted to become President; he didn't really want to BE President. That of course explains why he had no true policy plans. To the extent that he had policies, they were half-baked or completely raw. No sooner did he get into office than the scandals started mounting, and now it seems like he is headed for impeachment or worse.

It would only be logical that at this point he would be looking for a way to bail out, but how do you get out of something that you don't know how to end gracefully. The answer is that you forget about the "gracefully" part. Fortunately, there is a tried and true way to get out of something you don't know how to end otherwise quickly and absolutely: the fake heart attack.

Saturday Night Live, before it was even Saturday Night Live, when it was "NBC's Saturday Night", in its FIRST SHOW, in its FIRST SKETCH, called "The Wolverines" showed how its done.

http://www.nbc.com/saturday-night-live/video/the-wolverines/n8600?snl=1



Even Gary Johnson, who came in THIRD PLACE in the election of 2016 understands that sometimes you just have to fake a heart attack.



There are over 2.1 million hits on YouTube alone for "fake heart attack". 

Here's how it would work. Donald Trump fakes a heart attack -- gets an easy doctor to write him a note.  He leaves without getting impeached and retires to Palm Beach for Golf Therapy.  Trump wins because he gets out without being impeached. The country wins because we get him out now rather than later. Now, you can mock this idea all you want, but do you have a better one? 

Saturday, May 27, 2017

Volkswagen Adblue Heater Warranty Extension - Non-dealer Replaced Heater

If you replaced the DEF (Adblue) fluid heater in your Volkswagen diesel, were refused payment for the part because you didn't have it installed by a Volkswagen dealer, please contact me at 317-662-4529 or hoferlawindyATgmail.com. We are examining the possibility of bringing a group case. If the claim is large enough perhaps as a class action.  

Are you an auto dealer who has had a problem with Nextgear Capital Failing to Release Vehicle Titles?

Are you a car dealer or a consumer who has had an issue because Nextgear Capital Inc. has refused to release a title that they are legally required to release?  If so, WHETHER OR NOT YOU HAVE BEEN SUED AND WHEREVER YOU ARE LOCATED, please call me at 317-662-4529. As my co-counsel and I assess things, in most cases, a floorplan lender should NEVER refuse to release a ti-tle to a vehicle sold by a dealer in the ordinary course of business, even if the floor planner has not been paid for the car. Nextgear may very well disagree with this conclusion, but this is an issue that we are looking to have settled in court.

We have not had any complaints about Automotive Capital Services, ACS, but the legal reasoning would be the same.

We are currently representing multiple auto dealers in defense in suits filed by Nextgear. We haven't found the right case yet to test our offensive theories. Your case might be the one that lets us put all the pieces together.  Our perfect plaintiff would be one where there was a refusal to release the title, but where the dealer was not in default of any covenants to Nextgear.

If you would like to talk about this, call me at 317-662-4529 or email me at hoferlawindyATgmail.com.

Have you been sued by Discover Card OR American Express in Indiana?

We have received reports of an uptick in lawsuit activity by Discover card suing over defaulted credit cards. In at least one case, the consumer was able to have the lawsuit thrown out of court by demanding arbitration based on the arbitration clause in the contract. As a rule, I am not fond of arbitration, but every rule has an exception, and there are cases where you can use an arbitration clause in your favor.

Typically, under consumer arbitration rules, the consumer has to pay a relatively small fee for arbitration, usually about $250, and the business has to pay the rest of the arbitration fee. That fee is usually at least $2,000 and can easily be double that.  Most of the cases provide that either party can take the case to small claims court in lieu of arbitration.  For this reason, where small claims court is available, credit card companies often file there, and the consumer may not be able to get the case into arbitration, because the business was allowed to file the small claims case. That being said, there are cases the business can't file in small claims court -- some small claims courts have jusrisdiction limited to small amounts, under $2000 for example, and the credit card balance may be much higher than that. Also sometimes credit card companies don't take the case to small claims court for practical reason. Often small claims courts require a court date for an answer/deny appearance of the defendant that the creditor's attorney is required to attend. Many credit card companies hire one law firm to handle multiple states and/or large geographic areas within a state, and it isn't always practical for their attorney to personally cover these hearings. That's why they often file a case they could file in small claims court in a general court, (circuit or superior court in Indiana), where they can require the defendant to file a written answer (which 98% don't do) and obtain a default judgment if the defendant doesn't answer.

In essence, by filing a motion for arbitration immediately upon being sued on a credit card, the consumer can force the creditor to pay several thousand dollars in arbitration costs with no guarantee that they will ever even recover that amount from the defendant. When faced with that situation, the creditor often dismisses the case.

WHY YOU SHOULD HIRE AN ATTORNEY TO DEMAND THE ARBITRATION

Although a consumer can demand arbitration without an attorney, in most cases, there are reasons why I think you should hire an attorney to do this for you. The first is, you might not technically file everything right. The second is you might be able to set up the case so that the credit card company and/or its attorney owes you money.

If you are in Indiana, call me at 317-662-4529 or email me at hoferlawindyATgmail.com. (Replace the AT with @ - I have to write it this way to dodge spammers.)   As always, if you are outside Indiana find a consumer lawyer in your area at www.consumeradvocates.org.

If you are a car or truck buyer in Indiana who has had problems getting the title to your vehicle - call me

If you are a resident of Indiana, and you had problems getting title to a car or truck that you purchased from an Indiana dealer - EVEN IF YOU EVENTUALLY RECEIVED YOUR TITLE- please contact me at 317-662-4529 or at hoferlawindyATgmail.com.  I'm working with some other attorneys in trying to put together a big case involving a pattern and practice of illegal conduct by some of the players involved.

If our theories pan out, some players in the industry could be in for a world of hurt for a large amount of damages, BUT we have a lot of work to do before we have what we need to bring a suit.

Still, we may be able to help you get your title in the short term, and get some damages for the delay in the long term.  It's worth a call.

What to do if you are subjected to an unreasonable vehicle repossession

There is an article in the Indianapolis Star today reporting that a private investigator who sometimes does repossessions was alleged to have illegally impersonated a United States Marshall.

In my opinion, if a person impersonates a U.S. Marshall in the course of a vehicle repossession, the person who's car was repossessed would have a dandy lawsuit against the lender and the repossession company.

If you have a vehicle repossessed, what you need to know is that every element of a repossession, and the subsequent sale of the vehicle must be commercially reasonable, and if it is not, you can sue the lender for an amount equal to the entire finance charge on the loan, plus 10% of the amount financed, plus you might have a defense to any balance owed on the loan when you are sued for a deficiency.

If you have a vehicle repossessed and you want to know your rights, contact a NACA consumer attorney in your area at www.consumeradvocates.org.

Tuesday, May 23, 2017

Do you have a 2011-2014 Hyundai or Kia Vehicle that has blown an engine?

According to this article at The Truth About Cars, Kia and Hyundai have recalled 1.7 million vehicles equipped with the Theta II 2.0 and 2.4 liter 4-cylinder engines due to a problem with the manufacturing process that could result in metal shavings contaminating engine oil and leading to destruction of the engine.  The National Highwaay Traffic Safety administration has launched an investigation into whether the companies acted with reasonable speed once notified of the problems.

The vehicles affected are certain

Hyundai Sonata
Hyundai Santa Fe
Kia Optima
Kia Sorento
Kia Sportage

Don't assume that your vehicle is not affected even if you didn't get notice of a recall, especially if you bought the vehicle used.  A lot of the earlier models of these vehicles are hitting the buy-here/pay here lots now, perhaps after being unloaded by previous owners who started experiencing problems.

I successfully represented a client who had a Hyundai Sonata which had a blown engine. A subsequent inquiry into the history of the vehicle revealed that the vehicle was a "laundered lemon", that is, a vehicle that had been bought back by the manufacturer under the lemon law, but subseqently sold to by a dealer to the consumer without mandated disclosure of the lemon history.

You should be aware that if you bought one of these vehicles even if the manufacturer's warranty has expired, you MAY be able to get a new engine or engine repairs thanks to the recalls.  In some cases, if the dealer arranged financing and if you fell behind because the engine went out you MAY have a defensive claim, and in a few cases an offensive claim for damages.  This is far from universal, in some cases you won't be able to use problems with the vehicle as a defense.

If you had an engine go out on a Hyundai or Kia vehicle, I suggest that you contact a consumer lawyer in your area. You can find one in your area through the National Association of Consumer Advocates' Find an Attorney page.

Wednesday, May 17, 2017

Ron Burdge on the Problems with Secret Settlements

My friend and NACA consumer lawyer colleague, Ron Burdge, has for years been leading the crusade against secret settlements. In part because of his influence, I have long had in my contracts a provision discouraging my clients from accepting a settlement that mandates secrecy.  

Recently, Ron was interviewed on the topic by the Corporate Crime Reporter. Here is the link to the interview.  I agree with Ron's sentiment completely.

A quote from Ron:

Clients often object to confidentiality because they are frustrated and angry about what has happened to them and what the defendant did,” Burdge wrote. “Defendants want confidentiality often because of the feared perception of guilt that accompanies a settlement. The secrecy itself, on the other hand, may be adverse to public policy and protection of the public – in short, it can allow wrongful conduct to continue.”
“Confidentiality prevents the public from knowing about systemic wrongful conduct. It can also prevent regulators and government agencies from performing their duty to enforce the law and protect the public. The purpose of the court is to evenly administer justice to all so that all are protected by the law. When violations are hidden by confidentiality, the legal system itself is thwarted from fulfilling one of its fundamental purposes: to protect the citizenry from wrongful conduct.”
“Just as important, the legal system is funded by the citizenry. The use of government employees, monies, and buildings entitles the public to openness in all aspects of the legal process, including settlements that are achieved through use of the court system.”
“Society itself might be better off if all settlements were public knowledge. Wrongful conduct would be exposed not just for the economic justice of the victim, but for the broader societal purpose of curbing such wrongful conduct. Lawmakers and the public can see where problems exist, both in products and service suppliers, and act appropriately.”
In the United Airlines case, the world knew about the wrongful conduct – just not about the amount of the settlement.
Why is it important that the amount of the settlement be made public?
“It’s the amount that teaches both the corporation and the public how such conduct is going to be curbed in the future,” Burdge told Corporate Crime Reporter in an interview last week.
“When you keep the amount of the penalty private, other wrongdoers have no knowledge of what the cost can be and so they have no incentive to curb their own activity,” Burdge said. “There is a reason why punitive damages exist in most of the laws of the United States. It is not just to seek compensation that is fair. A penalty, whether punitive damages from a jury or a substantial settlement that a wrongdoer privately pays, teaches others in its industry that there is a price to pay for such outrageous conduct.

Sunday, May 14, 2017

Problem getting title to a vehicle because the Dealer didn't pay its lender?

Have you purchased a car or truck and had problems getting the dealer to release the title? Often the problem is because the dealer's inventory lender (known as a "floorplanner") is holding the title until the floorplanner gets paid either for this car or for a different car.

There are some statutes that you ought to know about when confronted with this problem in the Uniform Commercial Code which has been adopted by almost all states.

In Article 9, the article covering secured transactions (the rights of lienholders):

§ 9-320. BUYER OF GOODS.

(a) [Buyer in ordinary course of business.]
Except as otherwise provided in subsection (e), a buyer in ordinary course of business, other than a person buying farm products from a person engaged in farming operations, takes free of a security interest created by the buyer's seller, even if the security interest is perfected and the buyer knows of its existence.
(b) [Buyer of consumer goods.]
Except as otherwise provided in subsection (e), a buyer of goods from a person who used or bought the goods for use primarily for personal, family, or household purposes takes free of a security interest, even if perfected, if the buyer buys:
(1) without knowledge of the security interest;
(2) for value;
(3) primarily for the buyer's personal, family, or household purposes; and
(4) before the filing of a financing statement covering the goods.


In Article 2, the article covering sales of goods, there is the doctrine of entrustment, 2-403.

§ 2-403. Power to Transfer; Good Faith Purchase of Goods; "Entrusting".

(1) A purchaser of goods acquires all title which his transferor had or had power to transfer except that a purchaser of a limited interest acquires rights only to the extent of the interest purchased. A person with voidable title has power to transfer a good title to a good faithpurchaser for value. When goods have been delivered under a transaction of purchase the purchaser has such power even though
  • (a) the transferor was deceived as to the identity of the purchaser, or
  • (b) the delivery was in exchange for a check which is later dishonored, or
  • (c) it was agreed that the transaction was to be a "cash sale", or
  • (d) the delivery was procured through fraud punishable as larcenous under the criminal law.
(2) Any entrusting of possession of goods to a merchant who deals in goods of that kind gives him power to transfer all rights of the entruster to a buyerin ordinary course of business.
(3) "Entrusting" includes any delivery and any acquiescence in retention of possession regardless of any condition expressed between the parties to the delivery or acquiescence and regardless of whether the procurement of the entrusting or the possessor's disposition of the goodshave been such as to be larcenous under the criminal law.
[Note: If a state adopts the repealer of Article 6-Bulk Transfers (Alternative A), subsec. (4) should read as follows:]
(4) The rights of other purchasers of goodsand of lien creditors are governed by the Articles on Secured Transactions (Article 9) and Documents of Title (Article 7).
[Note: If a state adopts Revised Article 6-Bulk Sales (Alternative B), subsec. (4) should read as follows:]
(4) The rights of other purchasers of goodsand of lien creditors are governed by the Articles on Secured Transactions (Article 9), Bulk Sales (Article 6) and Documents of Title (Article 7).
[Note: As amended in 1988.]


In almost every case, these statutes give the buyer of vehicles from dealers a right in the vehicle and the title that is superior to the floorplan lender.  Unfortunately, floorplan lenders often ignore these statutes and still withhold titles.  You might need a letter from a lawyer to shake loose the title from the floorplan lender.  In my practice, in Indiana, I take the position that the wrongful withholding of the title by a floorplan lender is an unfair and deceptive act that is covered by the Indiana Deceptive Consumer Sales Act. I believe the consumer can ask for $500 as a statutory penalty in the initial demand to the floorplan lender.  This should be enough to cover the attorney fee for the initial letter. In the alternative, if your state's bureau or department of motor vehicles has a titles department or a consumer assistance department, that agency may be able to help you secure a title.  

Friday, May 12, 2017

An update regarding Nextgear Capital

I received four calls today from dealers involving Nextgear Capital. All of the dealers felt Nextgear treated them unfairly. Two of them wondered if I was planning a class action against Nextgear. The answer is no.   Nextgear writes very tough, tight contracts. Some things that dealers think are unfair are allowed buy the contract. In my opinion, Nextgear is run by smart people, and they have smart, competent attorneys.  You have to bring your "A" game if you are litigating against them. If you are professional, they will be professional. If you are reasonable. They will be reasonable.  I have not identified any systematic conduct by Nexgear that would justify suing them on a group or class action basis offensively.  Right now, I am just defending dealers as they are sued in Indiana.  If you have a beef with Nextgear, tell your story online.  You cannot be successfully sued for defamation for making true statements of fact or stating your clearly articulated opinion.  If a pattern emerges of conduct that would give rise to a legal case, it may become clear through the stories of many dealers.   If it is juicy enough, a large law firm will probably pick it up and run with it.

There are actually two areas that I am looking at with floorplan lenders in general. The  first involves the relationship between floorplanners and the auto auctions under shared ownership. IF there is "tying" involved between one business and the other, then in certain circumstances, if there is sufficient market power involved, antitrust law could be implicated.  If this sounds vague, that's because it is. It would cost a lot of money to develop this theory in any case where it might apply.

The second theory involves cases where a floorplan lender does not release the title to a vehicle that the dealer has sold in the ordinary course of business. It appears to me that under Uniform Commercial Code 9-320 and 2-403, the dealer has the power to transfer the car to an ordinary buyer free and clear of the security interest of the floorplanner in almost every case. The question then becomes who has the ability to sue the floorplanner when the floorplanner refuses to release the title? the dealer? the buyer? both? When titles are wrongfully withheld, how does that implicate damages?

Thursday, April 27, 2017

NACA Attorneys Participate in Money Smart Week Events

I was happy to participate in the Money Smart Week program that was co-sponsored by our frequent collaborator Call for Action and The Indianapolis Star.  Fellow NACA attorney Syed Ali Saeed and I gave consumer education presentations and free consultations with people who signed up to see attorneys at the event.  Thanks to Call for Action, Tim Evans, and Cheryl Koch-Martinez and the staff of the John Boner Neighborhood Center in Indianapolis.

Consumers Sue National Legal Staffing Support, LLC, Kevin P. Mason and K. Stuart Goldberg alleging illegal debt relief operation

The Consumer Law of Steve Hofer, filed a complaint in the United States District Court for the Northern District of Indiana on behalf of Joseph Castellanos and Bethany Castellanos against National Legal Staffing Support, LLC along with Florida attorneys Kevin P. Mason and K. Stuart Goldberg.  The suit alleges violations of  The Telemarketing and Consumer Fraud and Abuse Prevention Act (TCFAPA), Telephone Consumer Privacy Act (TCPA) , Indiana Credit Services Organization Act (ICSOA) and Indiana Deceptive Consumer Sales Act.  

The allegations of the complaint should be treated as allegations only unless and until proven in a court of law.  The complaint and other filed documents should be publicly available via www.pacer.gov. The court case number is 1:17-CV-00136.  

Thursday, April 6, 2017

The Anti-Yo-Yo Sale Law that Indiana needs.

One of my consumer law attorney friends, Larry Smith, from Chicago, pointed out that Illinois has an interesting law that would help us address a number of yo-yo car sale situations that come up frequently.  Yo-yo sales (sometimes called "gimme back", "spot delivery" or "puppy dog" sales) happen when the car buyer signs paperwork to buy the vehicle, takes the vehicle home, then the dealer says the buyer has to bring the vehicle back because financing fell through or some other problem.

Many car dealers insist that yo-yo sales are completely legal (they almost always use the term "spot delivery"), and most consumer advocates will tell you they are illegal. I can tell you that working on yo-yo sales is a pain in the rear.  This is especially true when most dealers who do yo-yo sales now use a separate document called a "spot delivery rider" or something similar. They claim the document gives them the right to unwind the sale.  Illinois addressed this with a statute that at least prevents the dealer from using the spot delivery as leverage to steal a down payment or a trade in.  And likely the statute prevents the repossession of the vehicle until the deposit and trade-in are returned.   We could use a statute like this in Indiana.

If you have a car dealer try to pull a yo-yo sale on you, as soon as the dealer tells you to bring the car back. call a consumer lawyer. Find one in your area at www.consumeradvocates.org.


815 ILCS 505/2C:

If the furnishing of merchandise, whether under purchase order or a contract of sale, is conditioned on the consumer's providing credit references or having a credit rating acceptable to the seller and the seller rejects the credit application of that consumer, the seller must return to the consumer any down payment, whether such down payment is in the form of money, goods, chattels or otherwise, made under that purchase order or contract and may not retain any part thereof. The retention by the seller of part or all of the down payment, whether such down payment is in the form of money, goods, chattels or otherwise, under those circumstances as a fee for investigating the credit of the consumer or as liquidated damages to cover depreciation of the merchandise which was the subject of the purchase order or contract or for any other purpose is an unlawful practice within the meaning of this Act, whether that fee or those charges are claimed from the down payment, whether such down payment is in the form of money, goods, chattels or otherwise, or made as a separate charge to the consumer.


Hofer Law is Investigating Trucking Industry Wage and Hour Violations

In conjunction with fellow attorney Keith Hagan, we are working on developing a secondary practice area addressing wage and hour violations, especially in the trucking industry.  We have represented a lot of truck drivers in consumer matters. Far too many truck drivers are working long hours for too little pay, and that leads them into a variety of financial and consumer problems. We want to go to the source and make sure these drivers get all the pay to which they are entitled.

The starting point is the actions we currently have going involving CDL schools.  Pay issues involving truck drivers can be complicated. For example, truck drivers are exempt from time and a half overtime under the Fair Labor Standards Act. On the other hand, over-the-road drivers are supposed to be guaranteed at least minimum wage for all the time they spend out on the road minus specific off the clock periods for meals and sleep. We are investigating potential claims involving unpaid orientation and training time.  We are in the early stages if this effort, and we expect that it will be years before it matures.  Nevertheless, if you feel that you haven't received all the pay that you should have, please call my office at 317-662-4529.  I can only work on cases that have to do with Indiana, but I would like to build up relationships with labor lawyers all over the country.

Wednesday, April 5, 2017

What's this? Used Car Prices Going DOWN? IN TAX REFUND SEASON?

The Truth About Cars reports that used car prices have gone steadily down this year.  This is especially  noteworthy because the first four months of any new year are usually the strongest for used car lots, because people use their tax refunds to buy used cars.  Typically, car prices edge up during this period to take advantage of higher demand.

Desperate dealers have been lowering credit eligibility guidelines.  You might find that you are eligible for mainstream financing when you think that your credit won't qualify you.  Don't assume that your only option is an overpriced "finance special" or buy-here-pay-here.  Try to stay away from old SUV's especially full-sized SUVs. I have seen some ridiculous prices for really bad SUVs.  Remember, lawyers can rarely help you if you pay a lot of money for a hunk of junk when they tell you up front that there isn't a warranty.  In most states you DON'T have a three-day right to cancel. So have a mechanic check out anything that you want to buy before you are committed.



Saturday, April 1, 2017

How likely is your car to last 200,000 miles? Probably less than 5%

Jalopnik.com posted an article listing the car and truck models most likely to last 200,000 miles (using data from iseecars.com).  The list is instructional.  Only the Ford Expedition and the Toyota Sequoia topped 5% (at 5.7 and 5.6% respectively).  Number 10 on the list was the Honda Odyssey at 2.3%.


What you should take from this is that though cars are lasting longer than ever, less than 1/20 will make it to 200,000 miles, and for most models, it's 1 out of 50.  Think about that when you re considering buying a used vehicle with 150,000 miles.

Look at this nice looking 2007 Ford Expedition on sale for $9795.

It has over 198,000 miles.  The Expedition is model most likely to last for longer than 200,000 miles, but only 5.6% of them do. That means that about 94% of this truck's contemporaries have already bit The dust.  This car is an outlier. It looks good. The conditional probability of a car with 198,000 miles to reach 200,000 is pretty high, but much like a 99 year-old person has a good chance of hitting 100%, the odds of that person hitting 105 are lousy. Similarly,  This 198,000 mile expedition may still only be one expensive repair away from the junk heap.  It may be good for years, but it would be foolish to buy it if you can't afford to fix anything that could go wrong.

A new loaded Ford Expedition might list for close to $50,000. That means that this car only costs about 20% of what a new one costs.  The day you drive a used car off the lot, it might drive as well and have as many features as a new Expedition; but make no mistake about it, on average you likely will have less than 20% of the useful life ahead of you as a new vehicle, and that 20% likely won't be problem-free. You can extend the life of old vehicles through maintenance and repair. This is especially true if you are not an armchair mechanic. If you can fix problems yourself, you can extend the useful life of vehicles a long time. If you have to pay for labor. buying a high mileage vehicle can put you on the fast track to bankruptcy.

If you are in the market for a used car, I suggest that you pay attention to mileage. I suggest that you read reliability ratings, and you find out what are the weakspots for a given model.  You pay to have a mechanic check out the vehicle before you buy it.  I suggest that you don't buy an extended warranty. The extended warranty is likely only going to pay part of the cost of the repair, and it might exclude the very thing that goes wrong.

Sunday, March 26, 2017

Right to Refill Printer Cartridges Issue Goes to the US Supreme Court

There is a surprisingly non-partisan case up in the United States Supreme Court right now, Impression Products v Lexmark, the Supreme Court is considering whether Impression Products has the right to refill and sell patented Lexmark inkjet printer cartridges.  The general rule in patents is once a company with a patent sells a covered product, the sold product is not subject to additional restrictions by the patent holder.

At issue is a judicially-crafted narrow exception for products that were sold with an explicit contractual restriction. Lextmark claims that its cartridges are sold with a restriction on resell on the outer shrinkwrap of the cartridges that is supposedly supported by a 20% discount.

The Supreme Court is supposedly having a tough time deciding this case.  They should let me write the opinion.  Here's my rough draft:

"Lexmark's position is complete bullshit. Th. The e shrinkwrapped contract does not represent true assent. The consideration is illusory. Even if the contract not to sell was valid, restrictions on sale of printer cartridges violate the very core principles of our patent system, so to the extent that the exception is valid at all, which may need to be considered in another case, it can't be stretched to this product. "  

Friday, March 24, 2017

Have You Had A Vehicle Repossessed by Baam Financial, Inc.? Look at their Lawsuits

If you have impaired credit and bought a car from one of the Andy Mohr Indianapolis-area dealerships, there is a good chance that your loan was placed with BAAM Financial Inc.   BAAM Financial files a lot of lawsuits in Marion county.  In representing a current client, I noticed that BAAM sues for unusually high deficiencies in what would be expected to be suits involving relatively low-priced vehicles.  Let me explain.

My client purchased a 2005 Nissan Altima from Andy Mohr Nissan, Inc. in May 2013. She financed $10,398.65 on this car which had over 133,000 miles on it when she purchased it. That's not a good deal, in my opinion, but it's not illegal.  The car was financed with BAAM Financial at 21% interest. Again, not a good deal in my opinion, but if you have credit issues you don't always have a choice. She made payments on it (not always on-time) until September 2016, when it was repossessed by BAAM.  At the time it was repossessed, there was a listed balance on the loan of $8,100.54. It is this amount that BAAM sued her for plus costs, interest and attorney fees.

Note that the record this stage doesn't reflect that BAAM recovered any proceeds from the sale after repossession of the vehicle, or that BAAM applied proceeds to the loan balance sued upon.  The law is clear that after repossessing a vehicle, the lender is supposed to dispose of the vehicle in a commercially reasonable way.  It is possible that an old vehicle with mechanical problems doesn't have any commercial value. If that is the case, we are going to argue in this case that it is commercially unreasonable to repossess it in the first place, and if the lender repossesses the vehicle then finds out that it has no value, we are going to argue that commercial reasonableness requires that the lender needs to give the owner a chance to reclaim the vehicle.

I did a quick survey of what happened in five other BAAM Financial cases in Marion County Indiana. All of these cases went to default judgment, so the attorney fees are not likely too high. Each one of these cases reflect what are (in my opinion) high deficiency balances for subprime credit vehicles.  I don't have records to tell me what caused the high deficiencies in these cases, but based on my experience with other cases, I would guess a mixture of high initial prices plus low prices obtained on disposition. Sometimes low prices at disposition are caused by commercially unreasonable sales, and sometimes not.  

Case Number                                 Judgment Amount
49D10-1604-CC-012616              $12,314,81
49D14-1601-CC-00113                $  8,402.18 ("and forfeiture of 2004 F150")
49D04-1601-CC-000104              $13,266.49
49D01-1001-CC-00118                $13,370.49
49D01-1601-CC-00110                $   8406.63

In summary, the amounts they are claiming after all credits were applied including after the sale of the car, looks a lot like what the car sold for originally,  This isn't right, and judgments like these can be the financial deathblow to a struggling individual or family.

If you are currently being sued by Baam Financial, please talk to a lawyer. You need to make sure your rights are protected. You need to make sure that the vehicle was sold in a commerically reasonable way and that the proceeds of the sale were applied to your balance.  If the finance company did not sell your vehicle in a commercially reasonable way (and getting an unusually low price at resale is often a result), you may be able to defend completely or partially against a lawsuit claiming a deficiency.  In certain cases, you may be able to raise a claim for damages and attorney fees to be paid by the other side.

IF YOU HAVE BEEN SUED BY BAAM FINANCIAL, INC., EVEN IF YOUR CASE WENT TO JUDGMENT, I WILL REVIEW YOUR PAPERWORK AT NO CHARGE TO YOU. PLEASE CALL ME AT 317-662-4529 OR EMAIL ME AT HOFERLAWINDY@GMAIL.COM.

Monday, March 20, 2017

Have You Been Sued by LVNV on an Out-of-State Judgment

I have a case where LVNV Funding, LLC, filed to  have a Tennessee judgment issued in the name of the original creditor converted into an Indiana Judgment in the name of LVNV.  We are currently fighting this.  If you are involved in a similar case, even in totally different states, please call me. I'm not really interested in getting more clients on this. What I want to do is to find out if LVNV is filing a lot of these.

Parent of CACH LLC files for Bankruptcy

Square Two Financial Corporation, the parent company of bad debt buyer CACH LCC, has filed Chapter 11 bankruptcy.  From the looks of it, this was a "prepackaged" bankruptcy, with Resurgent Holdings LLC waiting in the wings to buy up the assets of the company. 

If you are being sued by CACH LLC, your case is expected to go on without interruption.  There may be a snag in getting documents (even more than usual) because of the need to integrate CACH's record system with Resurgent's.

If you are suing CACH, then you have my sympathy. Your case will likely be caught up in the bankruptcy and likely be stalled for a good long while at best.

In my opinion, Resurgent (and its subsidiary LVNV) is neither better nor worse than CACH, so from a consumer's point of view, it's probably neutral.

Of course, the irony in this is debt collectors are notorious for ridiculing consumers about not being able to handle their finances, yet CACH has joined the list of collectors that bought debt at 5 cents on the dollar which couldn't meet their obligations.

If you are being sued on a consumer debt in Indiana, please call the Consumer Law Office of Steve Hofer.  I will evaluate your case at no cost to you.

Thursday, March 16, 2017

How to Record Debt Collection Calls on iPhone and Android

Often, to build a good legal case under the Fair Debt Collection Practices Act (FDCPA) or Telephone Consumer Privacy Act (TCPA) it is helpful - sometimes crucial- to have recorded phone calls. Back in formative years with landlines, we did this with either a suction cup adapter or inline box from radio shack - going into a cassette recorder.  Of course these days, cell phones - smart phones - rule, so recording is a bit more complicated - or not.

The simplest way to record a phone call now is to put the phone on speaker phone, and just record into another phone's memo recording app.

There are more complicated methods. Here's a recently-updated webpage discussing recording on iPhone. http://www.digitaltrends.com/mobile/how-to-record-calls-iphone/  

Here's a 2016 article with 5 call recording apps for Android.  http://joyofandroid.com/best-android-call-recorder-apps/

Remember that when you are recording phone calls you have to pay attention to wiretapping laws. You can NEVER record a phone conversation where you are not one of the participants in the call. That is true wiretapping. Most states are "single party" states which means if one party (you) is aware of the recording, it is legal to record the call, even without telling the other party.  A few states are "two party" consent states where both parties have to consent to the recording.  According to information I found on the web, the following states are two-party consent states: California, Connecticut, Florida, Illinois, Maryland, Massachusetts, Montana, New Hampshire, Pennsylvania, and Washington.  If you are in a one-party state and you record a call where the other party is in a two-party state, you won't be prosecuted for the call, but there may be limitations on how you can use it.


Tuesday, March 14, 2017

Nonbank Servicers Causing Havoc with Troubled Homeowners

The New York Post recently published an article about a troubling phenomenon that I have not seen anywhere else in the mainstream press, and that is the rise of nonbank servicers (NBS) handling home mortgages. I ran into this first a number of years ago with Ocwen Home Servicing. Ocwen got slapped pretty hard in 2012-2013 by the Consumer Financial Protection Bureau & the California Attorney General, agreeing to pay fines and penalties of several billion dollars.

The New York Post article points out that nonbank servicers have gone from 7% of the market in 2012 to 25% in 2015.  I would guess that at this point the NBS share of mortgages that are in foreclosure or preforeclosure is probably around 50% and rising.  This is important because the NBSs are not subject to the terms of the national mortgage settlement. This is important because as a general rule a company holding a mortgage has no duty to modify to prevent foreclosure. The national mortgage settlement created a framework for evaluating applications for mortgage relief, standards for granting relief, and prohibited moving forward with foreclosure while a mortgage relief application was pending - a practice called "dual-tracking".  Other than the mortgage settlement, the only real mandates for modification come from the rules of the mortgage insurers, and those are a joke.  There are state laws that attempt to impose penalties for unfair practices in mortgage servicing, but there are more holes than fabric in the patchwork quilt of state laws.

The big daddy these days among the nonbank servicers is Caliber Home Loans.  Caliber is starting to draw some scrutiny for the way it is servicing loans, and it has been the subject of numerous complaints by consumers  whose applications for mortgage relief were either mishandled, ignored or both.  Caliber is the servicing arm of Loan Star Funds, a private equity firm that  if you  believe the New York Post article is worth $60 billion.  Lone Star Funds got this big because they buy troubled mortgages at a discount, usually from insurers who already covered the initiating bank's losses, entities like FHA, Freddie Mac and Fannie Mae.  If you have a loan that was bought by LSF9 Master Participation Trust. That's a Lone Star fund.  Sometimes Lone Star doesn't buy the loan from the guarantor, it buys it from the actual lender. I have received complaints that the homeowner's mortgage was sold by the original mortgage company to LSF9 where the foreclosure took place and then back to the original mortgage company. In my opinion, that is a whitewashing scam that is designed to get around the rules of the National Mortgage Settlement. If you had a Wells Fargo loan that was sold to LSF9 Master Participation Trust or had its servicing transferred to Caliber Home Loans, you should pay attention to what happens to it after the foreclosure sale. You may have a very narrow window to make your complaints count and perhaps bring a legal claim between the time the home is sold to the lender after the foreclosure and the time you are forced to vacate.   If this has happened to you, you need to file a complaint with the CFPB and your state attorney general.  Find yourself a NACA consumer advocate lawyer at www.consumeradvocates.org.


http://nypost.com/2016/04/16/non-bank-servicers-creating-bigger-mortgage-problems/?utm_source=facebook&utm_medium=site%20buttons&utm_campaign=site%20buttons

Update Regarding LSF9 Master Participation Trust

My most popular post ever on this blog had to do with LSF9 Master Participation trust. I have been contacted by numerous people who either are facing foreclosure on an LSF9 Property or want to buy a distressed LSF9 property.  It has gotten to the point where these calls are interfering with my business.  Still, I understand people are craving information. I wish I had more to give them.  I put together this update to my post of 9/2015 which I also appended to the original post.  There are some good comments on the original post. So if you see this post. please go to the original post here.


UPDATE 3/14/2017

Since I wrote this blog post a year and a half ago, it has been by far my most popular post, with over 14,000 hits. I have also gotten emails from lots of frustrated people trying to deal with LSF-9.  Most of these have either been people who are either trying to buy LSF9 properties or who are facing foreclosure on an LSF-9 mortgage.  I have this to say about each category:

IF YOU ARE FACING FORECLOSURE ON A MORTGAGE OWNED BY LSF9 Master Participation Trust, or maybe LSF8 or LSF10 or whatever, get advice from an experienced consumer lawyer IN YOUR AREA.  To find one in your area use the National Association of Consumer Advocates' Find an Attorney page.  I can't represent you if you are not a resident of Indiana. 

 IF YOU ARE TRYING TO BUY A PROPERTY OWNED BY LSF-9 AND CAN'T FIND ANYBODY TO CONTACT, good luck, I can't help you.  You can write to Caliber. You can write to the lawyer handling the foreclosure case.   You can write to Lone Star Funds, the parent company, at the address below which I took from their website.





  • Lone Star Global Acquisitions, Ltd.

    • Lone Star North America Acquisitions, LLC
    2711 North Haskell AvenueSuite 1700 (and Suite 2150)DallasTexas 75204USA
    214-754-8300