"Help, I've been sued by AFC, but I have no idea how they are coming up with saying that I owe so much money" - the role of the Forensic Accountant

 We have had a lot of calls in the past few months from people who have been sued by Automotive Finance Corporation (AFC) either for breach of contract, or breach of guarantee, but the amount claimed is an order of magnitude greater than what the dealer or guarantor believes might be legitimately owed.  (Note that this article could apply to any floorplan lender, but we have mostly been fielding inquiries of this nature about AFC.  We have generally been able to work out disputes over numbers with Nextgear Capital without as much difficulty.)  

We have found that these cases are challenging, because the person calling us may not even have access to the books and records of the dealership, and AFC may have cut the dealer off from online access of their account with AFC.

The documents that AFC provides with the litigation don't have all the information to solve the problem, and even when AFC provides more documents by formal or informal discovery, that doesn't tell the whole story. What AFC provides is in a form that they use to bolster their case (because, of course).   There is always a possibility that your accountant will dig into the numbers and find that AFC's numbers are good.  

The unfortunate truth is that there may be no cheap way to resolve these cases unless you have meticulous records from your dealership backing up your position.  If you have a readily presentable paper argument supporting your claim, we can advance that argument and negotiate with AFC, or oppose summary judgment, at a low cost.  If you don't, litigating against AFC is likely to get much more expensive.

If you need to build a paper case supporting your proposition that you don't owe AFC what is claimed, you may need a forensic accountant to evaluate AFC's paper claims. The forensic accountant can cross reference it against the company's books, and can tell us (the attorneys) what additional information that is needed to fully do a forensic audit of the claim.  In the context of a case in litigation, the goal is to get a report from the forensic accountant that supports our position in the case, usually that the amount claimed is too high.  This report can be used in mediation or arbitration, and the accountant can testify if the case goes to trial as an expert witness.  

The Catch: Forensic accountants are niche professionals with extra training that typical accountants don't have. It is likely that any forensic accountant you can get will charge significantly more than your company's regular accountant. Forensic accounting can be time consuming.  You may have to pay more for your forensic accounting than you do for your attorney.  Also, it isn't always easy to find a good forensic accountant.  

For more information on the role of a forensic accountant, here is a link.  Planning for Fraud: Using Forensic Accounting to Protect Your Business - Tire Review Magazine

True or false: My children will be stuck with my timeshare when I die. Mostly false.

 There is a new generation of timeshare "relief" companies out there. The names I keep hearing are Wesley Financial Group and Timeshare Exit.  This generation of timeshare relief companies don't seem to be drawing the same level of criticism and scrutiny as what I saw in the 1990s. Maybe that's because this generation of companies don't promise to "sell" your timeshare.  I have never seen a company that promised to sell your timeshare be anything but a scam. It is very possible for a company to promise "relief" from a timeshare and deliver, but you should understand at the beginning what type of "relief" is being proposed and make sure the costs are worth the benefits.  

In the past 20 years "Points" based timeshares have mostly taken the place of "deeded" timeshares, and that's probably a good thing. Deeded timeshares were/are nightmares in any number of ways.  From what I can tell, point-based timeshares are easier to get out of because most of the companies are content if you just give up your initial "investment", and they don't seem to have the desire to chase you for continuing support. 

There is one thing that the ads for timeshare relief companies may leave you with the wrong impression about, and that is that your children will be stuck with your timeshare when you die.  That isn't necessarily true. They won't automatically be stuck with your timeshare when you die, but they could be if they and you aren't smart about things. Because timeshares are easier to get out of than they used to be, you might find that it costs less to pay your timeshare company what they want to get out of it than to pay a timeshare relief company.  You also might find your cheapest option is to simply hold onto the timeshare until you die and let let the timeshare lapse upon your death. (The timeshare company may have a creditor's claim for dues and assessments, but most people die without ever opening a probate estate, and a lot of creditors' claims never get paid.)  

The key thing for you to know and for your children to know, is they will not be liable on the timeshare without an act of ACCEPTANCE on their part. Whether you try to give them the timeshare while you are alive, or upon your death through an estate or intestate succession, if they refuse to accept the timeshare they should not face continuing liability. Now that means that they can't accept any benefit from the timeshare.  Similarly, if someone leaves you a timeshare when you die, you are not liable unless you ACCEPT it. 

If you own a timeshare, when you are doing your estate planning, I suggest you talk to your children (or other heirs or devisees) prior to making your will, to see if they WANT your timeshare upon your death. It is very important to explain to them the expected and potential costs, the fees and assessments, any amount due under the purchase contract, and the benefits and limitations on usage as well as the process , costs and limitations on week trading.  Let them know that they don't have to take it.  If they want it, understand the costs and can handle the costs, fine, give it to them in your will. (When you die, if they change their minds they can still reject it or refuse to accept it.) Otherwise, consider specifically saying in your will that the interest should either be transferred back to the timeshare company or no action should be taken regarding the timeshare interest.  There are some companies out there that say they accept timeshares as charitable donations. I have not researched any of these companies, and I can't say one way or another whether using one is a good idea.  

If you are ever sued by a company collecting any type of timeshare obligation, or even receive a collection letter, I suggest you contact a consumer attorney in your area who is a member of the National Association of Consumer Advocates. You can find a NACA consumer attorney at www.consumeradvocates.org/find-an-attorney. 

Note: Please don't call me if you have a problem or beef with your timeshare company.  I can only represent timeshare buyers who live in Indiana, and I don't have much if any space on my docket at present for them.  Also note that I only am licensed to practice law in Indiana. I know that most states require acceptance to make a valid gift, I can't guarantee that ALL states have the same rule.  Before you take an action regarding your timeshare, I suggest you tak to a lawyer in your state.  I have seen timeshare companies DENY that acceptance is required to make a gift even in states where it clearly is. Sometimes you have to stick to your guns.  

What happens if AFC Gets a Judgment Against Me?

 Automotive Finance Corporation, commonly known as AFC, has been suing more of its customers in Marion County (Indianapolis), Indiana than in previous times.  In most of these cases, AFC gets a default judgment, then they begin post-judgment collections.

If AFC takes a judgment against you what can you expect? You can expect that any national financial institution that you have dealings with, if AFC knows about it, AFC will send interrogatories to that institution to find out about your accounts, and will attempt to seize any non-exempt funds from those institutions.

Recently, we have found out that AFC may also try to seize funds owed to you or the dealership from credit card processors such as Square Inc. In addition we have seen AFC go after any money from payment transfer companies such as Zelle (Early Warning Services, LLC).  We haven't seen them go after Venmo, but we wouldn't be surprised if they did.  

These collection activities are legal.  If you want to keep AFC from attempting to seize assets involuntarily, if you qualify you can seek bankruptcy protection. In the alternative, you may be able to negotiate a payment plan or post-judgment settlement with AFC.  We can assist you, if you want to do this, please call us at 317-662-4529.   

Do you have an Issue with IMG or Seven Corners over a Wrongfully Denied Travel Insurance Claim?

 We are investigating the case of a claims denial by IMG insurance over a travel policy.  It has come to our attention that policy holders from all over may be forced to litigate cases against IMG and Seven Corners in Indiana thanks to policy language setting Indiana as the venue.  If you are looking for an attorney to handle a case against either of these companies, please feel free to call us at 317-662-4529.  

Art Institute of Indianapolis and Elements Financial Federal Credit Union - Possibility of Private Student Loan Assistance

I was vaguely aware of the Art Institutes, that it was a big conglomerate of private for-profit colleges, that it shut down in 2018, and that there was a plan for forgiveness of certain federal student loans due to alleged fraud by the university.  Until recently though, I had never been contacted by one of the students.

That changed this week.  An issue came up regarding a private student loan through Elements Financial federal Credit Uunion for the Art Institute of Indianapolis.  

It appears that the Art Institute may have referred students to Elements Financial, if so, students may have an argument under the FTC Holder Rule that any claim they would have against Art Institute might be raised as a defense or partial defense against repayment to Elements Financial.  

This is a complex topic.  If you went to Art Institute of Indianapolis and were financed by Elements Financial or any other lender that was referred to you by the school, I am interested in talking to you, and we might have a shot at getting you some help.  Note that right now I am not dealing in cases involving FEDERAL student loans. 

If you went to any other Art Institute, or have issues regarding federal student loans, I urge you to contact an attorney in your area through the NACA consumer lawyer referral service at www.consumeradvocates.org/find-an-attorney.  

A general information article I found is linked below. I cannot vouch for the accuracy of the entire article, so get a second source before acting on anything contained in this link. 

https://studentloanbattle.com/art-institute-loan-forgiveness.html

Legal Fees in Perspective $2,750 vs $2.75 million - Bill Cosby

A news story today that Bill Cosby still owes $2.75 million in legal fees. We have no idea how much he paid over time, but there is no question that Bill Cosby was not a poor man going into his criminal case, I would expect that the unpaid balance is less than half of what the representation ultimately cost.

What strikes me is the disparity in resources people can put into different legal cases. I do a lot of consumer and business debt defense cases.  My fees for a standard business case range from $2,500 to $5000, because that's all the businesses can afford. For consumer cases, my fees are sometimes lower - when I can afford to do those cases.  That's on the order of 1/1000 what Bill Cosby put into his criminal defense case -- or to put it another way, for every 1 hour I can put into a case, Bill Cosby's lawyers put in a half year's worth of work - and he still lost. 

What I have learned is to make a defense case useful and worthwhile on a budget, you have to carefully plan your strategy. You must have well-defined goals and objectives, and a pathway to get there. 

Nextgear and AFC updates in Covid Time

We continue to handle a lot of floorplan defense lawsuits, defending dealers sued by Nextgear and AFC.  They are still filing new cases even though the court systems have been slowed by COVID-19.  In general, our perception is that Nextgear has been willing to work with us in recognizing the new reality of Covid-affected dealers.  AFC has been much more difficult.