By Kenneth Long on November 23, 2011

In what she calls a perverse misuse of the courts, Lisa Madigan is pushing state court judges to stop authorizing arrest warrants for debtors who fail to show up in court. The AG is convinced debt collectors are abusing this practice which allows for arrest of those who intentionally defy court orders.

Over a third of states allow the use of misdemeanor arrest warrants to force debtors to comply with court orders to repay their debt. The purpose is to give power to the courts who demand repayment of defaulted debts.

Debtors frequently fail to appear at court hearings in which they owe debt. Without a defense, the judge normally grants a default judgment to the plaintiffs.

Arrest warrants can be requested in certain instances in which there is reason to believe that the debtor intentionally is defying a court order to repay the debt. If the plaintiff convinces the judge that the debtor is hiding assets or is otherwise able but unwilling to pay, the judge may agree to issue a misdemeanor arrest warrant.

According to Illinois Attorney General Lisa Madigan, some debt collectors are beginning to abuse the practice, essentially turning the state's sheriffs deputies into agents for debt collection. Often these debtors are picked up on unrelated charges or stopped for simple traffic violations, at which point they are arrested on the spot and taken back to jail to meet with the magistrate.

Back in March 2011, Debtors Unite ran a story explaining that there are no longer debtors prisons, but that arrests are still possible. While most states disallow the practice, some do still allow for arrest. This is generally only allowed when the court has reason to believe that the debtor is able to pay but refuses to comply with the court's decision.

If you find yourself facing a judgment, it is normally best to attend the court hearing and defend your position. If you fail to show up, you automatically lose. Instead, you should provide some defense and try to preserve your rights. If you believe you do not owe the debt, then some legal representation might be advisable.

Of course, often the best option is to avoid court altogether. Finding a compromise with your debt collector can help you both reduce costs and could keep a judgment off of your public record and credit report.

Illinois' attorney general is fighting the proliferation of arrest warrants for unpaid debts. While this is not a legislative solution, it could make it more difficult for debt collectors to convince the courts that arrest is necessary.

By Kenneth Long on November 22, 2011

Legal Aid is often the only access to legal advice for America's poor. It relies on funding from taxpayers in order to provide pro bono legal services. Now Congress has reduced funding for the service, thereby putting pressure on individual Legal Aid offices to maintain service levels with fewer staffers.

Legal Services Corporation (LSC) was chartered by Congress to provide access to competent legal advice to struggling households who cannot afford to pay for an attorney. LSC provides its services through locally operated Legal Aid offices.

Qualifications for free legal advice include a requirement that you are classified as low income. Legal Aid offices base eligibility on the Federal Poverty Income Guidelines. Income requirements may vary from one state to another.

A reduction of $56 million means that hundreds of attorneys and support staff will lose their jobs at individual offices. In order to maintain service levels, some attorneys may have less time for each client. Still, it is expected that individual Legal Aid offices will have to make qualifications for free legal help much stricter.

They are really going to have to be resourceful to make up for the loss of funding. Most Legal Aid offices depend heavily on recent law school graduates who are looking to gain experience before launching their own legal careers. This will put pressure on law schools who are looking for more placements for their students.

In order to determine whether you qualify for free legal assistance, find your local Legal Aid office using LSC's locator list. You may need to ask whether you meet the income requirements before you can get an appointment. Additionally, there are asset limits, which could make it hard for people that have recently fallen on hard times but still have some assets.

If you need legal help and believe you might qualify for some assistance, make sure you become aware of the free legal help options that are available.

By Kenneth Long on November 16, 2011

Like them or hate them, Occupy Wall Street protesters have gained notice among big banks and Wall Street firms. This time, OWS has set its sights on a Bank of America branch in San Francisco.

The downtown branch on California Street and near Davis Street first became overwhelmed at about 2:15 pm on Wednesday. Riot police removed dozens of protesters by 4 pm.

OWS protesters took control of the bank and refused to leave. They pitched a tent in the lobby and stood on desks chanting "we are the 99%." Some wore bandanas.

While it would be tempting to connect the protest with big bank bailouts and Wall Street greed, this time the protest was in response to a "ReFund Public Education March." The University of California Board of Regents previously canceled their meeting which was scheduled to take place in San Francisco. Apparently, this protest was arranged to take the message to the place where they (UC Board of Regents) "do Wall Street's business."

So regardless of what you may read, this protest was more about California's planned funding cuts to higher education than it was about corporate greed, bank bailouts and other Wall Street excesses. This time, Bank of America is more of a victim than a perpetrator, not something the bank is accustomed to.

The OWS protests are fragmented and send mixed messages. While Debtors Unite believes that consumers should express their First Amendment rights to protect themselves, we must admit that the OWS phenomenon is a problematic approach that often results in laws being broken and public safety being compromised.

Instead of the OWS approach, we much prefer Molly Katchpole's approach of obtaining 30,000 signatures in her protest of Bank of America's planned debit card fees. The bank has since agreed to cancel its planned fee.

By Kenneth Long on November 15, 2011

Oklahoma clients were charged $10 a month for new checking accounts. Atlanta clients had to shell out $15 a month to open a Chase checking account. We heard about Chase matching the other big banks cancellation of monthly fees on debit cards. Now Chase has ended all three unpopular fees.

While the bank will not reveal the results of the trials, the cancellation should speak volumes about their effect on new client enrollment. It is likely that the bank did not meet new account enrollment objectives due to the unattractive fees.

Like other big bank bosses, Chase executives failed to predict how aggressively consumers would fight the fee hikes. While Bank of America's monthly debit card fees ignited a consumer firestorm of criticism, Chase was also on the hot seat.

The $10 fee charged to Oklahoma customers could not be waived. Atlanta's $15 monthly fee could be waived when customers maintained at least a minimum balance of $1,500.

Chase still charges $12 a month on its regular checking account. Customers may opt out of paying that fee only if they receive direct deposits or maintain a high enough monthly account balance.

Chase's announcement ironically comes on National Fire your Bank Day, and follows a big self-imposed deadline of consumers determined to break free from the big banks.

Now that Chase has ended these unpopular fees, all eyes are watching to see what the next round of new fees will be. Chase is still under pressure to meet revenue expectations even though recent legislation on debit card interchange fees has cut into their revenues.

By Kenneth Long on November 14, 2011

Are you annoyed by debt collectors making threats? You probably did not know that debt collectors are prohibited from threatening actions that they cannot take.

Just because a collection agency cannot threaten such actions doesn't mean that they follow the law. In fact, many debt collectors routinely violate federal and state collections law.

Sure they lose an occasional FDCPA lawsuit for violating terms of the Fair Debt Collection Practices Act. Yet, the gains from cheating are greater than the penalties for doing so. As long as most debtors are clueless to their rights, the abuses will continue.

For example, has a debt collector ever threatened to garnish your wages? In many states, this is not allowed. Therefore, a collection agent may not legally threaten a garnishment if your state does not allow wage attachment for private debts.

Other common abuses include threats of arrest or imprisonment. Perhaps the agent is using excessive profanity or other abusive language. They may be calling your home excessively or revealing the existence of your debt to employers or other third parties. All are illegal actions that can be the basis for a lawsuit.

Deciding to file a lawsuit is a serious decision, and normally one that can bring substantial upfront cost. Attorneys that specialize in FDCPA lawsuits can help you sue debt collectors without costing you a penny in attorneys fees. The fees are paid by the defendent in the case upon successful victory. If you lose, you owe nothing.

Therefore, it can pay to talk with an attorney if you believe your rights are being violated by an aggressive collection agent. The attorney can help you understand what actions are indeed violations as well as coach you on documenting the abuse. Such documentation can be important proof that the agent is violating your rights as guaranteed by collections laws.

Not every attorney has experience in filing these FDCPA lawsuits, so make sure you choose an attorney with a track record of successful lawsuits in these matters. Your debt could be offset with a victory against an abusive debt collector.

Most such cases generate a $1,000 civil penalty against the rogue collector. There are some extreme cases in which much more has been won by debtors, such as the $1.26 million won by a victim of wrongful garnishment of wages. Paying what you owe is always recommended, but that does not mean you have to take abusive treatment. Fight back for the rights you deserve!