Archive for January, 2010

They say that everything’s bigger in Texas. For examples, one could point to everything from cattle, to hats, to oversize pickup trucks. Now add to that list the tumbleweed-sized cojones on Dallas resident Craig Cunningham.

A recent piece by the Dallas Observer details how Cunningham flips the script on debt collectors, takes advantage of their tactics and with some mean m0ves of legal judo actually makes money by suing their asses and winning big.

Of course without being behind on his bills, Cunningham wouldn’t have any problems with collection agencies. His troubles started in 2005, when a combination of failed real estate speculation, huge credit card debt and subprime mortgages sank him and forced him to go into foreclosure on two investment homes.

As you can imagine (or may be experiencing) the bill collectors quickly came a-calling.

Desperate, the now 29-year old Cunningham (who is currently between jobs except for his work as an Army reservist) figured out how to make the hardball ploys used by the debt chasers to his own lucrative ends.  Searching for information in online forums, he was told about the many federal and state laws that protect consumers against unfair debt collection practices.  The told him that if he knew a few basic rules, the odds were good that he could catch a collections agent violating them.  Then he could sue.

Here’s an account of his first bout with the man:

Cunningham armed himself with this knowledge, and the next time a debt collector called, the trap was set.

It didn’t take long. Cunningham had canceled a home alarm service with ADT Security after two months, and the company had billed him a $450 early termination fee, which he disputed. ADT sent his account to Equinox Financial Management Solutions, a third-party debt collector. The collection agency sent him a letter asking that he call back immediately. He dialed, armed with a voice recorder.

“Can you garnish my wages if I don’t pay?” he asked.

“Yes,” the voice on the other end of the line said.

“Can you put a lien on my house?”

“Yes.”

Wrong answers. Turns out, Texas consumer rights laws are some of the most consumer-friendly in the country. And according to a federal consumer protection law, the Fair Debt Collection Practices Act (FDCPA), debt collectors are prohibited from threatening legal action that would violate state laws. In this case, garnishing wages or putting a lien on Cunningham’s house would violate the Texas Debt Collection Act.

Cunningham engaged an attorney and within a few months he had a cool $1,000. This was too easy. He was hooked.

He figured that he could handle these types of complaints on his own and so he ditched the lawyer. So far he has filed 15 other suits in federal court without the help of a lawyer, earning settlements totaling more than $20,000.

He now is regularly able to trap bill collectors in his web and make them pay for their crimes.  And he’s not the only one. There is a subculture of people known to the debt collection industry as “credit terrorists” (although I’d call them debt freedom fighters) and they are good at striking fear into the hearts of callers.

We’re written about the illegal and unethical practices of debt collectors before. Most hire poorly trained staff who are chasing an easy buck and never think that they can get caught on tape.

So if you are being harassed by debt collectors, maybe you’ve just found a new source of income. The Observer article is a fascinating read and an interesting place to learn more about a successful debt freedom fighter.  You’ll also want to learn more about Federal laws governing debt collection and your local statutes as well.

Texans are known for their fight. Saddle up and ride with this one.  Yee-haw!

The Obama administration’s program for helping troubled mortgage borrowers avoid foreclosure has been less than a success. Few people received long term help because of the onerous amounts of paperwork needed for the processing of loan modifications and the unwillingness of banks to dedicate sufficient staff to handle it all.

Obama has been under fire for not doing enough to ease the burdens of the unemployed and middle class families at risk of losing their homes and his recent State of the Union speech reflected his newfound dedication to the cause.

So in an attempt to improve the efficacy of his anti-foreclosure programs, the Treasury Department offered up changes designed to accelerate the processing of the burdensome paperwork required for its foreclosure relief plan, according to people briefed on the matter.

Like so many of the big government programs launched by this administration, there’s been a lot of money allocated ($75 billion in this case) and little quantifiable results. Americans are now looking for accountability in the face of rising national debt and this change in course should provide more measurable benefits.

The new rules, which start June 1, will effectively shift the paperwork burden to the start of the process.

“They aim to make it easier and quicker to provide permanent modifications,” said U.S. Treasury Assistant Secretary Herb Allison. “These changes also will enable servicers to process more efficiently and handle more volume effectively so we can help more people more rapidly.”

Lenders will now be required to collect two pay stubs at the start of the process, and borrowers will have to give the Internal Revenue Service permission to provide their most recent tax returns at the same time, according to the people who declined to be identified because the details were not yet final.

Participating mortgage companies must acknowledge receipt of a borrower’s application within ten days and approve or deny the application within thirty. Under the new rules borrowers will still be required to make three months of trial payments before the modification becomes permanent.

If you are behind in your mortgage and don’t have a plan to keep your home, contact your lender immediately and to learn more about government programs that may help visit http://makinghomeaffordable.gov.

After years of anticipation Apple finally unveiled it’s long-awaited tablet PC called the iPad.

Like most major Apple announcements (usually accompanied by the sound of angels playing harps) this new device is expected by Mac fanboys to heal the sick, bring about world peace and make them actually look cool. This despite the fact that many are now likening the iPad’s name to feminine hygiene products.

The iPad does pack a lot of firepower wrapped in a thin, sexy, package. Kind of like Angelina Jolie in Tomb Raider. It’s a web-surfing, e-book reading, game-playing, app-running sliver of aluminum and glass that will play a siren song to many.

I know that this device is going to tempt many Debtbeat readers, who probably fit the key demographic of early adopters. Over the past ten years our credit card companies have gotten fat off the spoils of needless charges made at Best Buy and yes, the Apple Store. Citibank probably bough three private jets on flat-screen TV proceeds alone.

But I am hereby making an impassioned plea to everyone with a hankering for the next hot thing out of Cupertino.

YOU. DO. NOT. NEED. THIS.

The iPad is designed to fill a new niche; bigger than a cellphone (i.e. iPhone) and more handy than a laptop. Unfortunately you’ll still need both of those, which you probably already have.  And it does nothing that these devices don’t already do.

Before the the iPad was launched many analysts predicted a cost of $1,000 or more, comparable to Apple’s cheapest laptops. However, Steve Jobs surprised everyone with a starting price of just five hundred bills.  This cost goes up to $829 for the model with 64GB of storage.

Check out the pricing structure:

The iPad connects to the web via WiFi or AT&T’s 3G network, but as you see from the grid above you’ll have to pay more for the version with 3G.

And in addition to the cost of the device itself you’ll also have to spring for monthly fees to use AT&T’s cellular network.

This will set you back either $15 or $30 a month. To use the same AT&T network that can barely handle the iPhone’s data traffic. Usually devices with a monthly fee are subsidized, this turns that model on it’s head. (And kicks you in the ass.)

Worse yet, for folks already struggling with outstanding credit card debt who choose to charge this (and my guess is there will be thousands of them) you’ll also have to factor in interest charges on top of the purchase price, taxes and AT&T fees.

And of course you can’t forget the accessories like the keyboard and cover.  And the apps.  And the screen protector. And every other add-on that can now be developed now that the world knows what the iPad is.

Hopefully the fact that these devices aren’t available yet will give folks time to reassess whether or not they have to have one. The Wi-Fi models are supposed to start shipping in late March and the versions with 3G integration are to begin shipping in April.

The bottom line is that the iPad is pretty, but not frugal for anyone with bills to pay.  Even if you use it to access Mint.com.

What was until now the most beautifullest slab device, Amazon’s Kindle Wireless Reading Device, is now the ugly girl at the dance.  But she is cheap at only $259 and with free 3G access.