Friday, April 2, 2010

Something Wicked This Way Comes...

Greetings good citizen,

There is a disturbing tendency by the MSM to treat very widespread cases of social dislocation (meaning it is happening to millions of people) as ‘isolated incidents’.

Naturally, the reverse is true when they are cheerleading the thus far ‘invisible economic recovery’. Any tiny increase over last year’s abysmal numbers is heralded as the next ‘proof positive’ that the glorious recovery hasn’t been ‘derailed’…

What is totally missing from this equation is proof that the recovery ever really started!

There’s something particularly frightening about ‘perception management’, especially when the facts don’t line up with what is being reported.

When these little ‘differences of opinion’ lead to bloodshed, it is treated as an ‘isolated incident’…until its not.

Left to our collective imagination is how far away are we from the veil being torn away from the disaster that is being hidden from the public?

Tonight’s offering may provide as good a gage as any if we keep in mind that the stories laid out here ARE NOT ‘isolated incidents’…

Pay Garnishments Rise as Debtors Fall Behind
Published: April 1, 2010

PHOENIX — When the bank sued Leann Weaver for not paying her credit card balance, her reaction was typical for someone in that situation. Personal and financial setbacks weighed her down, and she knew she owed the $2,470. So she never went to court to defend herself.

She was startled by what happened next. When she swiped her debit card at the grocery store, it was declined. It turned out Capital One Bank had taken $224.25 from her paycheck, a quarter of her wages for two weeks of work at a retail chain, and her bank account was overdrawn.

“They’re kicking somebody who’s already in the dirt,” she said.

One of the worst economic downturns of modern history has produced a big increase in the number of delinquent borrowers, and creditors are suing them by the millions. Concern is mounting in government and among consumer advocates that the debtors are not always getting a fair shake in these cases.

Most consumers never offer a defense, and creditors win their lawsuits without having to offer proof of the debts, much less justify to a judge the huge interest charges and penalties they often tack on. [I’m no ‘legal eagle’ but I don’t think creditors can ‘write off’ bad debt without first exhausting all ‘reasonable efforts’ to collect. (Pretty sure the definition of ‘reasonable’ varies from state to state and sometimes credit instrument to credit instrument.)]

After winning, creditors can secure a court order to seize part of the debtor’s paycheck or the funds in a bank account, a procedure called garnishment. No national statistics are kept, but the pay seizures are rising fast in some areas — up 121 percent in the Phoenix area since 2005, and 55 percent in the Atlanta area since 2004. In Cleveland, garnishments jumped 30 percent between 2008 and 2009 alone.

Debt collectors say they are being forced into the action by combative debtors who dodge attempts to settle. “I think there’s a lack of accountability among debtors, and a lack of interest in reaching out to their creditors to resolve things amicably,” said Fred N. Blitt, president of the National Association of Retail Collection Attorneys. [Do you suspect, given the current economic situation, that this latest development in the war to bankrupt the ‘surplus population’ and drive them into destitution is unlikely to have a ‘peaceful outcome’?]

Bankruptcy can clear away most debts. Yet sweeping changes to federal law in 2005 — pushed by the banking lobby — complicated that process and more than doubled the average cost of filing, to more than $2,000. Many low-income debtors must save for months before they can afford to go broke. [The icing on this ‘shit sundae’ is the bankruptcy attorney won’t accept your case if you don’t pay ‘up front’!]

In some states, courts allow creditors to charge high interest rates for years after a lawsuit is decided in their favor. In others, creditors can win lawsuits by default and seize wages and bank accounts without a case ever appearing before a judge. [Which is a total failure of ‘due process’ but hey, it is what it is and you weren’t going to ‘win’ anyway!]

Lack of participation is the most fundamental problem. Some consumers do not even know they are being sued; the people who are supposed to serve them with formal notice have sometimes been caught skipping that step and doctoring the paperwork. [Which, naturally, redefines the term ‘Nasty Surprise’.]

In far more cases, consumers are served but still do not offer a defense. Few can afford lawyers; [Why do you suppose that is?] others are intimidated or confused. In their absence, judges can offer little relief.

In the rare event that a consumer battles back, creditors frequently lack the documentation to prove their claim, and cases are dropped. That is because many past-due debts are owned not by the banks that issued them, but by debt collectors who bought, for cents on the dollar, a list of names and amounts due. [This is an interesting bit of information…but it is doubtful debtors will go to court over ‘trivial amounts’. (That is a rather broad window with the word trivial being defined by the ‘beholder’…)]

“If the consumers were armed with more education about how to defend against these debts, they’d be successful,” said Jeffrey Lipman, a civil magistrate in Des Moines.

The case of Sidney Jones shows how punishing the system can be. In January 2001, Mr. Jones, 45, a maintenance worker from California Crossroads, Va., took out a $4,097 personal loan from Beneficial Virginia, a subprime lender now owned by HSBC, the big bank.

He fell behind, and Beneficial sued. Mr. Jones did not appear in court. “I just thought they were going to take what I owed,” he said.

By default, Beneficial won a judgment of $4,750, plus $900 in lawyers’ fees, with the debt accruing interest at 27.55 percent until paid in full. The bank started garnishing his wages in March 2003.

Over the next six years, the bank deducted more than $10,000 from Mr. Jones’s paychecks, but he made little headway on his debt. According to a court order secured by Beneficial’s lawyers last spring, he still owed the company $3,965, a sum nearly equal to the original loan amount.

Mr. Jones, who did not graduate from high school, was baffled. “Where did all this money go that I paid them?” he said. [Understand good citizen, the fact that Mr. Jones didn’t graduate from High School is ‘irrelevant’; look at the financial carnage caused by people who were PAID to know better! They include this seemingly ‘innocent’ fact to make him appear less ‘responsible’.]

Dale Pittman, a consumer law lawyer in Petersburg, Va. , took Mr. Jones’s case without charge, and found that all but $134 of his payments had gone toward interest, fees and court costs. “It’s a perfectly legal result under Virginia law,” Mr. Pittman said.

HSBC said it ceased collection shortly after Mr. Pittman took the case, but declined further comment. “We are confident we are treating our customers fairly and with integrity,” Kate Durham, a spokeswoman for HSBC North America, said in an e-mail message. [Um, once again we encounter the relative terms of ‘Fairness and integrity’ and you can bet your boots that Beneficial firmly believes they have behaved in compliance with THEIR DEFINITION of both terms…they just aren’t sharing their definition with us. Which is to point out the obvious, if Mr. Jones had not found an attorney willing to do some ‘pro bono’ work, HBSC would still be milking his ass for all they could get…and there isn’t a fucking thing he could do about it.]

The rare debtors who press their claims, and catch a sympathetic judge, have a shot at a result more to their liking. [Um, notice the ‘qualifiers’ thrown in there? Most judges don’t look kindly on ‘deadbeats’ nor do they have much sympathy for ‘sob stories’… they’ve heard them all.]

Ruth M. Owens, a disabled Cleveland woman, was sued by Discover Bank in 2004 for an unpaid credit card. Ms. Owens offered a defense, sending a handwritten note to the court.

“After paying my monthly utilities, there is no money left except a little food money and sometimes it isn’t enough,” she wrote.

Robert Triozzi, a judge at the time, heard the case. He found that over a period of several years, Ms. Owens had paid nearly $3,500 on an original balance of $1,900. But Discover was suing her for $5,564, mostly for late fees, compound interest, penalties and other charges. He called Discover’s actions “unconscionable” and threw the case out. [Are you wondering the same thing I am? What happened to ‘Judge at the time’…he’s not a judge anymore? Do you wonder why?]

Discover defended its actions. “This account was placed with an attorney only after all other efforts to reach the card member were exhausted,” Matthew Towson, a bank spokesman, said in an e-mail message. [Are you detecting a pattern? It seems as though the debtors aren’t the only ones who are ‘difficult to contact’! Opps, how many of you KNEW this was coming?]

Going to court is no guarantee of victory, of course. Consumers who do go are sometimes intercepted by collection lawyers, who press them to sign papers settling without a trial. These settlements may be against the interests of debtors, but they sign anyway.

“We’re signing off on a lot of settlement agreements where we shake our heads and ask, ‘Why is this person settling to this?’ ” Judge Lipman said. [Again, savvy attorneys know they can get ‘something’ out of these people because there is no dispute that they owe (and they feel guilty.) In the end it comes down to how much they can wring out of these people (in addition to what they’ve already paid.)]

For the working poor, losing a lawsuit can mean disaster. A 1968 federal law exempts 75 percent of a worker’s wages, or 30 times the minimum wage per week, from being taken in garnishment — whichever is less. But increases in the minimum wage have failed to keep up with inflation. As federal law stands now, just $217.50 a week is exempt from seizure. (A few states set higher cutoffs.)

The working poor “have difficulties maintaining payments on life’s necessities with their full paycheck,” said Angela Riccetti, a lawyer with Atlanta Legal Aid who represents indigent clients whose wages are being garnished. “You lose 25 percent of it and everything folds.” [It is no ‘accident’ that regional ‘prevailing wages’ are close (and often below) regional prices/living expenses.]

For Leann Weaver, the woman at the grocery store, Capital One’s lawsuit made a bad situation worse. After being evicted from her apartment, she moved in with her grandparents. Without them, she might have ended up on the street or in a shelter, she said.

Capital One declined to comment on Ms. Weaver’s case. “We encourage anyone facing difficulties meeting their financial obligations to contact us right away,” Tatiana Stead, a bank spokeswoman, said in an e-mail message.

Ms. Weaver said she repeatedly asked Capital One for more time to pay her $2,470 debt, but last year the bank filed suit. She failed to show up in court, and a judgment was entered against her, swollen by $1,800 in interest and lawyers’ fees. Then the garnishment began, almost $500 a month, or a quarter of her pay.

“I can’t even look at my paychecks any more,” she said.

If you want to add insult to injury you can bet Ms. Weaver is wondering why she agreed to be interviewed for this article. While she wasn’t portrayed badly, neither were the ‘predators’.

I guess it is up to the public to draw their own conclusions.

How do you interpret this piece good citizen? Do you see it as just another disturbing ‘sign of the times’ or do you detect the ‘warning shot’ from our corporate overlords lurking just beneath the ‘bring it on’ challenge to take ‘em to court?

Truth be told, you chances of going before a ‘sympathetic’ (to you) judge are pretty much ‘slim to nil’ and if, as we see here, you haven’t already paid the vulture twice what they gave you, you don’t have a prayer of the judge finding in your favor!

The ‘rule of thumb’ here good citizen is the creditor needs to be ‘made whole’, then there is a shot at ‘settling’…but if you haven’t paid back AT LEAST as much as you borrowed…you don’t have a prayer.

BUT WAIT, I don’t know any of the details but I just heard an advertisement yesterday that claimed if you owe MORE THAN $10,000 on a credit card, you COULD BE eligible for ‘NEW FEDERAL PROGRAM’ that would cut your debt in HALF!

You can only imagine what ‘qualifiers’ are bundled in behind THAT bad boy!

Starting with the debt has to be of a certain age…(preferably ‘pre-dating’ the ‘amnesty’ offer) and there is likely another regarding ‘singularities’…meaning the $10 k plus in credit card debt isn’t all due to a new pair of Jet Ski’s (with trailer and optional ‘color coordinated’ cap.)

And you may also have to show that you can ill afford to pay this debt.

Bizarrely, the $10,000 ‘minimum’ kind of raises a ‘red flag’ all by itself. None of our examples…in fact, all of them combined, would put us barely in range of this offer!

Cards with more than $10,000 limits aren’t all that uncommon…it’s the credit card companies approving you for that much credit (without freaking out) that makes you ‘suspicious’.

You gotta be pulling down some pretty good money for credit card companies to let your balance get that high. But wait, like ‘sub-prime’ mortgages, credit card debt was, up until recently, bundled up and sold off to investors! So maybe the banks weren’t as ‘stringent’ as they ‘should have been’…leading to this most perplexing ‘2 for 1’ offer.

Mine is not to reason why, good citizen…I can only sit here and ponder why I have a bad feeling about this…

Thanks for letting me inside your head,


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