|Given the legal and legislative edge the banksters have, go for it|
In the words of many, "F" the banks
They've proven their complete disregard for the consequences of their greed on the country and total lack of compassion towards their customers.
A little tip for any reader who gets sued for default, don't ignore the complaint. If that's done it's easy for them to get a judgment. It takes two minutes to respond with a denial or whatever is appropriate and drop it in the mail. It immediately throws them off their game. No lawyer is needed to answer a complaint. Just look for a model or template of a response.
Beneficial(HSBC) especially sucks. They once repo'd my car because a single payment was late and they couldn't get in touch with me.
Cost about a thousand to get it back and everything of value was missing. And it never drove the same.
Pay Garnishments Rise as Debtors Fall Behind
by John Collins Rudolf
Thursday, April 1, 2010
The New York Times
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.
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.
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.
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.
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.
In far more cases, consumers are served but still do not offer a defense. Few can afford lawyers; 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.
"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.
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.
The rare debtors who press their claims, and catch a sympathetic judge, have a shot at a result more to their liking.
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.
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.
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.
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."
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.