Student Loan Mess Putting Government in the Debt Collection Business

Student LoansThis is going to seem like a “dog bites man” kind of news story. It likely won’t come as a shock that debt collection firms contracted by the Dept. of Education, to collect on the $67 billion of defaulted student loans, are running into big problems with borrowers. This has been thoroughly documented in a detailed new report by the National Consumer Law Center (NCLC).

The report shines a critical light on the exacerbating part of the problem, a grossly inadequate complaint & response infrastructure. (No doubt the Dept. of Education had no idea what they were getting into when setting up a program that offered a significant financial incentive to collection firms that recouped defaulted debt.)

Bloomberg reports collection firms getting up to 37% funds collected, creating an environment where it pays, handsomely, to get people to pay up. It’s astounding to see student debt collector Joshua Mandelman earn $454,000 in a single year, twice the pay of the Secretary of Education (and a fraction of what his boss took home.)

Now I don’t begrudge anyone making money, wealth is responsible for curing nearly every societal ill. However what the NCLC report shows is that these earning are coming from student loan collection abuses. It’s amounting to a repeat of the same tricks and abusive behavior we’ve seen in areas like 3rd party credit card collections.

It may be time for Richard Cordray and the CFPB to step in and oversee not just public markets collections, but governmental efforts too.

 

Join Bill Bartmann as he works to reform the debt collection industry. Sign our petition here. 

Bill

Hi, I'm Bill Bartmann and I am on a mission to reform the debt collection industry in America. Please join with me as we bring a petition to Washington D.C., and make Congress close all the legal loopholes in debt collection practices. It's time to stop these debt collection abuses and stop these criminals. Join with me! Sign the petition today! http://stopthesecriminals.com/petition

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Shared Sacrifice – Practical Wisdom From NY’s 1st District | Bartmann Blog

NY Tim BishopLast August I was extremely pleased when President Obama and Senate Majority Leader Reid pushed for a massive deficit reduction package of $4 trillion dollars. Unfortunately, partisan politics once again threw a wrench into us solving our deficit problem.

Now, because the so called “Super-committee” failed last November in its task to determine the specific places to cut spending, we are faced with budget sequestration (aka automatic across the board budget cuts.) These indiscrimant cuts could be devastating.

I was inspired and moved by Congressman Tim Bishop (D-NY) who, while pushing a “go big” $4 trillion deficit reduction target, is also exercising practical wisdom when it comes to dealing with the horrific consequences of budget sequestration’s across the board cuts.

“The cuts contained in the budget sequestration could damage our nation’s defense readiness, as well as hinder our ability to help the most vulnerable members of our society.  To be clear, these cuts are unacceptable. However, the proposal passed today by House Republicans (hr 5652) to remove the defense cuts and replace them with reductions to programs that directly affect middle class families and the poor is a misguided approach inconsistent with our nation’s values. Moving forward on a sustainable fiscal path will require shared sacrifice, and I cannot vote for one-sided legislation that places the burden of closing the budget gap disproportionately on low and middle income families.”

~ NY Congressman Tim Bishop

Protecting the country and our most vulnerable citizens is too important to be left to random cuts.

This standoff reminds me of the story of two sisters fighting over an orange. Exasperated they finally compromise by cutting the orange in half, each getting an equal share. One sister throws out her peel and eats her half of the orange. The other sister uses the skin of the orange for zest in a dinner recipe and throws out her half of the fruit. With a little bit of communication they could have both gotten 100% of what they wanted.

I don’t harbor any illusions that everyone can get exactly what they want here. Which is exactly why everyone should follow Congressman Bishop and at least do no harm.

 

Join Bill Bartmann as he works to reform the debt collection industry. Sign our petition to ban debt collectors from suing to collect on past due credit card bills.

Bill

Hi, I'm Bill Bartmann and I am on a mission to reform the debt collection industry in America. Please join with me as we bring a petition to Washington D.C., and make Congress close all the legal loopholes in debt collection practices. It's time to stop these debt collection abuses and stop these criminals. Join with me! Sign the petition today! http://stopthesecriminals.com/petition

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A Key Part of the Debt Abuse Solution — “Walking a Mile in Their Moccasins” | Bartmann Blog

alex nathanThere’s a wise Indian proverb that says “Before you criticize someone, walk a mile in their moccasins.” After reading the inspiring story of Alex Nathan, it struck me that doing just that could go a long way to reforming many debt collectors abhorrent behaviors.

The reason I’ve always treated my clients (those CFS & CFS II collect delinquent debts from) with extreme dignity and respect is because I experienced first hand what it was like to be treated by debt collectors like I wasn’t worth spit. I’ve been through bankruptcy and I know, in excruciating detail, what it’s like trying to provide for a family when you have absolutely NO money.

The irony is that by treating people with kindness, you actually end up collecting more. This is now being proven publicly by people like Tom Gillespie and Alex Nathan.

What’s particularly interesting about Mr. Nathan is that he recently lost everything and found himself living in a Salvation Army homeless shelter in Sarasota, Florida. This experience allowed him to know, first hand, the difficulties people were having. His subsequent business became helping people get out of debt and was driven by his personal experience on the financial brink. Today he is making a lot of money by truly helping people. Honestly, what is better than that?

This got me to thinking:

What if EVERY debt collector would have had the ACTUAL experience of running out of money and being harassed by collection agents?

At the very least they’d learn two things:

  1. It’s miserable.
  2. Harassment isn’t terribly effective.

Those of you who have followed me for a while know that I’ve been working hard to get legislation passed in all 50 states that, in part, requires debt collectors to be licensed. Now I’m thinking that part of that licensing process should include a way to give collectors the down & out experience that I, Alex Nathan and countless others have had.

The question is, how do we do this?

I don’t have all the answers, so I’m asking for your help — how can we give prospective debt collectors the “experience” of being in debt and harassed by collectors, in a classroom or self-study type setting?

Let me hear your thoughts (in the comments below or on my Facebook page!) It might just end up making a profound difference in the lives of millions of people!

Bill

Hi, I'm Bill Bartmann and I am on a mission to reform the debt collection industry in America. Please join with me as we bring a petition to Washington D.C., and make Congress close all the legal loopholes in debt collection practices. It's time to stop these debt collection abuses and stop these criminals. Join with me! Sign the petition today! http://stopthesecriminals.com/petition

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Victim Awarded $10 Million from Abusive Debt Collector | Bartmann Blog

abusive debt collectorIt would be the understatement of the year to say debt collector Reliant Financial Services (RFA) picked on the wrong woman in Diana Mey.

As detailed in this expose by ABC’s Nightline – http://abcnews.go.com/US/va-woman-fights-collect-10-million-debt-collectors/t/story?id=16205697#.T5hslsTUO8A – RFA’s egregious abuse just cost them a record $10,860,000 judgment.

RFA’s misconduct included:

- Attempting to collect on a debt not owed by Ms. Mey

- Threatening legal action of seizing Ms. Mey’s home

- Spoofing caller ID numbers so collection calls appeared to come from the local sheriff

- Use of threats and vulgarities

Fortunately Ms. Mey recorded the calls so there was no disputing what she went through. Unfortunately, collecting on this debt is going to be a lot more difficult than winning the case as RFA is apparently a fictitious business name.

A tip of the cap to Nightline for bringing this story to light and Ms. Mey’s attorneys, Martin Sheehan and Patrick Cassidy for taking a case they may never be compensated. You’ve likely saved many others from being victimized. Thank you for stepping up and giving a powerful voice to someone in need.

 

Join with Bill Bartmann as he works to change the debt collection industry.

Bill

Hi, I'm Bill Bartmann and I am on a mission to reform the debt collection industry in America. Please join with me as we bring a petition to Washington D.C., and make Congress close all the legal loopholes in debt collection practices. It's time to stop these debt collection abuses and stop these criminals. Join with me! Sign the petition today! http://stopthesecriminals.com/petition

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Bank of America – Stepping Up To Be Part of the Solution | Bartmann Blog

bank of americaThis week Bank of America begins the process of helping distressed homeowners stay in their homes. BoA announced Monday that they are sending the first letters offering a restructuring of mortgage debt, by reducing the principal, this week. This will save 200,000 BoA homeowners an average of 30% on their mortgage payments. This will make a significant difference in the lives many families and their support systems.

This comes on the heels of a Bank of America revamp of their short sale process (when homeowners owe more on the home than its current market value), cutting their approval time in half from 45 days to a maximum of 20 days.

Big banks are easy targets to knock. They should be recognized, too, when they do the right things.

Bill

Hi, I'm Bill Bartmann and I am on a mission to reform the debt collection industry in America. Please join with me as we bring a petition to Washington D.C., and make Congress close all the legal loopholes in debt collection practices. It's time to stop these debt collection abuses and stop these criminals. Join with me! Sign the petition today! http://stopthesecriminals.com/petition

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Anatomy of an Unlicensed Collector Shakedown | Bartmann Blog

debt collection scamsReporter Tina Jordan, did a phenomenal job of telling the disturbing story of Darrell, a disabled gulf war veteran, who has been pursued for a debt (that has a high probability of not even being his) by an unlicensed collector. Here’s my insider color commentary to Tina’s “play by play”:

  • Darrell was contacted in January 2010 for a delinquent bank credit card debt from 2004-2005.

Darrell’s account was no longer owned by the original bank. They had sold it to debt buyer Asset Acceptance LLC. Asset Acceptance in turn outsourced the collections work to Daniel N. Gordon Professional Collections (DNGPC). DNGPC is unlicensed in Oregon and do not have the legal right to collect debt in the state where they were pursuing Darrell. Why would Asset Acceptance contract an unlicensed firm to collect on their debts? They are hoping that since they bought the debt and are the current debt owner, that they fall within the loophole of debt “owner” instead of debt “collector” which allows them to collect and get around most all legal debt collection restrictions. However, how Asset Acceptance can argue that their proxy, DNGPC, is a debt “owner” too is a bit baffling. But, unless local authorities step in (unlikely in most jurisdictions today), they’ll end up getting away with it.

  • The original debt principal was $6,854, DNGPC/Asset Acceptance tacked on fees to make the amount they were trying to collect over $14,000.

Interesting tactic especially when you consider that Asset Acceptance likely purchased the debt for around $350. These extra charges, even if eliminated in a negotiated settlement, still leave them with a windfall and enough “juice” to make DNGPC’s “commission” lucrative relative to the minimal purchase price. However, if this debt was past the statute of limitation, the extra fees have a more sinister implication. By making the debt more significant there is a greater likelihood they could persuade the debtor to pay “something” to get the harassment calls to stop. If the debtor pays ANYTHING, the debt would instantly re-age to become legally collectible again.

  • Darrell disputed the debt by certified mail and asked for verification.

Savvy move. Debt collectors often have shoddy records and take the approach to throw a lot of s#@* against the wall and see what sticks. In Darrell’s case the collector didn’t respond directly to this request, it got worse as they went into full deep pocket bully mode.

  • DNGPC sues Darrell, presenting the court with an UNSIGNED cardholder agreement as evidence along with a document claiming their original complaint was delivered to a “John Doe” who was a 45 year old brown haired man, 5’10 and weighing roughly 180 lbs. Darrell is older, graying, 6’1″ and around 240 lbs.

Shaky evidence, sure. But since most defendants never show up in court to defend themselves, the collector receives a quick default judgement, even though there was never real verification that the true defendant never even knew there was a complaint filed against them. This is a practice known as “sewer service” because for all you know the notice of suit was thrown down the sewer, never even being attempted to be delivered to the proper person.

The real scary thing is that this is not uncommon. What Darrell is going through is a common everyday happening to millions of people within the U.S. and around the world.

Darrell commented to Tina, “I proudly served in the United States Air Force for 13 years, including two missions to Saudi Arabia during Desert Storm.” “I certainly didn’t think the America that I felt so honored to represent — at the time — would ever allow a megabank’s collection agency to harass ordinary people like me.”

Well Darrell, you’re not alone. You represent what might be the tipping point voting block in this coming election. Keep speaking up because an election year is when politicians really are listening.

Bill

Hi, I'm Bill Bartmann and I am on a mission to reform the debt collection industry in America. Please join with me as we bring a petition to Washington D.C., and make Congress close all the legal loopholes in debt collection practices. It's time to stop these debt collection abuses and stop these criminals. Join with me! Sign the petition today! http://stopthesecriminals.com/petition

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Coercion 2.0 – Embarrassment via Facebook | Bartmann Blog

facebook and debt collectionIn the “old” days if a debt collector wanted to embarrass you into paying, they had to do it one person at a time – knocking on doors of your neighbors or writing family and friends.

Today’s ubiquitous social networking services, like Facebook with almost one in 12 people on the PLANET having an account, makes it much easier for unscrupulous debt collectors to harass and intimidate.

A typical tactic involves the debt collector befriending you with a fake profile. Once accepted they have access to all the personal data you’ve made available – Phone, email, employers, address, websites and your whereabouts.

Worse, they have easy, unfettered access to your friends, family and colleagues, and can easily defame and humiliate you on your own “wall.” The same effort it used to take to embarrass you to a single individual can now be done with hundreds or thousands, depending on the size of your social network.

There Oughta be a Law

If you want to understand the urgency behind having new legislation for debt collection practices, you need to look no further than these new technology services. Facebook, Twitter, Linkedin, Google+, Pinterest et al were not even a gleam in the eye of today’s Internet titans when the Fair Debt Collection Practices Act (FDCPA) was written.

You can’t blame a rat for crawling through a nook to get at the cheese. It’s our responsibility to close up the holes.

 

Join Bill Bartmann as he works to change the debt collection industry.

Bill

Hi, I'm Bill Bartmann and I am on a mission to reform the debt collection industry in America. Please join with me as we bring a petition to Washington D.C., and make Congress close all the legal loopholes in debt collection practices. It's time to stop these debt collection abuses and stop these criminals. Join with me! Sign the petition today! http://stopthesecriminals.com/petition

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The Truth About “Nice Guy” Collectors | Bartmann Blog

Tom GillespieI believe that most debt collectors who harass, deceive and intimidate in order to collect debts, don’t do it because they enjoy inflicting pain on others. Rather, they do it because they believe that it is the best way for them to collect what they are rightfully due and provide for their employees and families.

The irony is that this hurtful approach actually yields them less financially.

I’ve long contended, and my companies financial returns have long proven, that treating people with dignity and respect yields far superior collection rates than industry averages.

Many have discounted our results, choosing to see us as an outlier, not the everyday rule.

Well today that is a bit harder since Baltimore, Maryland based Access Receivables has gone public with the results of their pilot “Nice People Collect More” program.

You can read the full story here: http://www.virtual-strategy.com/2012/04/25/revolutionary-nice-debt-collection-approach-yields-40-higher-returns#.T5hQbcxxTIU.email

Access Receivables president, Tom Gillespie, is reporting collection rates 40% higher with their “nice guy” approach, compared to previous results.

Let that sink in, 40% more…by treating people properly.

Contrary to public perception, most debt collectors are business people, not masochists. I believe that as they see the results of the “nice guy” approach from more than one other company, the lightbulb will go off for them, like they were hit over the head with the “obvious stick.”

After all there’s not a greater force on earth than self-interest.

 

Join Bill Bartmann as he works to help reform the debt collection industry.

Bill

Hi, I'm Bill Bartmann and I am on a mission to reform the debt collection industry in America. Please join with me as we bring a petition to Washington D.C., and make Congress close all the legal loopholes in debt collection practices. It's time to stop these debt collection abuses and stop these criminals. Join with me! Sign the petition today! http://stopthesecriminals.com/petition

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Stop Paying Upfront Fees to Financial Firms — PLEASE!!

I know it sounds tempting, but if a firm offers to modify a delinquent loan/mortgage of yours and requires an upfront payment… DO NOT PAY IT. IT IS USUALLY A SCAM.

Case in point: Arizona Attorney General Tom Horne, and his able Assistant Attorney General Cherie Howe, just reached a settlement with Underwater Property Solutions (UPS), a Scottsdale, Arizona based mortgage loan modification service company. The State accused UPS of deceptively scheming to collect advance fees from consumers looking for assistance in obtaining mortgage loan modifications.

UPS would tell consumers that they could stop foreclosures and that consumers were guaranteed a modification that would save them hundreds of dollars a month. This was nothing more than speculation and often proved to be false.

There are evil people out there who prey on the desperate because those who are desperate are most likely to grasp at any straw that resembles hope. There will be a special place in hell for these people, but for now we can’t just rely on Attorney Generals to protect us. We’ve got to educate ourselves and be aware.

Special Note: Attorney General Horne can’t enforce anything outside of his home state, even if he wanted to. That means this company, along with their co-defendant The Mortgage Law Group, LLP, that also does business under the name Macey, Aleman & Searns, a Chicago, Illinois law firm, are free to continue their reign of terror in other states.

 

Please help get the word out about this. 

Bill

Hi, I'm Bill Bartmann and I am on a mission to reform the debt collection industry in America. Please join with me as we bring a petition to Washington D.C., and make Congress close all the legal loopholes in debt collection practices. It's time to stop these debt collection abuses and stop these criminals. Join with me! Sign the petition today! http://stopthesecriminals.com/petition

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The Loan Modification Scam | Bartmann Blog

debt collection wild westAll successful scams use the victims beliefs against them. Today most consumers in financial trouble know that those they owe money to may be willing to settle their account for less than the full amount due. After all, collecting something is better than collecting nothing.

Therein lies the seed that opens so many under financial duress to be preyed upon by scam artists. Case in point:

Yesterday Arizona Attorney General Tom Horne filed suit against Mortgage Relief Group, d.b.a. Mortgage Assistance Group, and its owner, Stan Allotey for deceiving consumers into paying fees, ranging from $995 to $3,245, for loan modification services by misrepresenting their ability to help consumers obtain mortgage relief and save their homes.

This company apparently would lure financially distressed homeowners into paying up-front fees with promises that the company would prevent foreclosure by negotiating modifications of mortgage loans. (The collection of up-front fees has been banned by the Arizona Foreclosure Consultant Regulation Law.) Then, once homeowners paid the upfront fees, the Defendants allegedly often failed to perform their part of the contract, keep homeowners informed of the status of their application for a modification, refund fees, or otherwise do anything to earn their fee.

“Predatory loan modification scams are an unfortunate part of the housing crisis,” Attorney General Horne said. “Cases such as this show that every consumer needs to thoroughly research the companies with which they do business. And it is a reminder that nobody should ever agree to paying up-front fees for services of this kind.”

I couldn’t agree more. And, this is just as true with firms that tell you they can do the same with your credit card debt.

It’s the wild west out there; ignore this at your own peril.

Bill

Hi, I'm Bill Bartmann and I am on a mission to reform the debt collection industry in America. Please join with me as we bring a petition to Washington D.C., and make Congress close all the legal loopholes in debt collection practices. It's time to stop these debt collection abuses and stop these criminals. Join with me! Sign the petition today! http://stopthesecriminals.com/petition

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