Recently in — Debt Collection

Chattanooga Pay Day Lender Charged With Usury in New York

Chattanooga, Tennessee pay day lender Carey Brown is facing criminal usury charges in New York.  Usury is defined as the lending of funds at an exorbitant rate or a rate above that permitted by law.  State law varies on what rate is considered to be usurious.  Brown and two associates are accused of forming shell companies to extend and collect pay day loans at rates above that permitted by law in the State of New York.

Pay day loans offer the promise of quick cash that must be repaid with interest once the borrower receives their next paycheck.  While New York law caps interests rates at 25%, the companies’ rates ranged between 350% and 650%. The Manhattan District Attorney, Cyrus R. Vance, Jr., described the practice as “exploitive” and “sadly typical of this industry as a whole.”

Brown made his fortune selling used cars.   The corporate entities crafted by Brown were allegedly designed to hide the true owners and the origination of the loans.  Some were formed offshore or on Indian reservations.  Prosecutors say that the site was incorporated in the West Indies to place the company beyond the reach of U.S. authorities.  The number of entities (twelve) further obscured the trail leading back to Brown.  Brown’s alleged legal advisor Joanna Temple and COO Ron Beaver are also charged.


A Debt Collector Is Calling Me

You are at home, and someone calls you.  It’s a number you don’t recognize.  You pick up and quickly realize that the person on the other end of the line is a debt collector.  They tell you that you owe money to a company you have never heard of.  Or, they talk about a debt you recognize but the amount doesn’t sound right.  What do you do next?

You may have more options than you realize.  If you are tired of the telephone calls or just don’t seem to be getting anywhere with the collectors, you may want to put it in writing.  The Consumer Financial Protection Bureau (CFPB) has published five form letters you may want to use to communicate to the collector about the debt.

The first letter requests more information about an unfamiliar debt.

The second letter indicates you, the consumer, are disputing the debt and do not want the collector to contact you again.

The third letter may be used if you want to communicate with the collector to resolve the debt, but only want them to call or contact you at certain times.

The fourth letter notifies the collector you have hired an attorney and that they must contact them and not you.

The fifth letter is a request to stop contact.  The collector could pursue other remedies such as bringing a lawsuit to collect the debt, but this letter could provide some temporary relief.

The CFPB provides general information to consumers.  For a free consultation regarding your specific debts and legal rights, contact The McKellar Law Firm, PLLC.


New Legal Handbook for Tennessee Seniors

The Tennessee Bar Association‘s Public Education Committee has provided The Legal Handbook for Tennessee Seniors, updated for 2014.  The book provides helpful guidance for Tennessee seniors and their families on a number of issues, including social security, retirement accounts, veteran’s benefits, tax relief, Medicare, long-term care, housing, grandparent visitation rights, and estate planning.

The handbook also contains helpful information for people of any age on the general topic of consumer protection.  Topics covered include credit cards, resolving billing errors, debt collection, deceptive sales practices, and scams.

The handbook is provided free and can be downloaded here.


Debt Collector Pays Fines and Restitution In New York State

A man who operated several debt collection companies over the last five years reached a settlement with the state of New York last month.  According to the Buffalo News, the man allegedly operated his company using illegal debt collection practices. Joseph Bella’s debt collection companies operated for just a short time, then closed up shop to move to a different location under a different business name.

Pay day loans, where a debtor borrows money at a high interest rate in anticipation of paying off the loan with their next paycheck, are illegal in New York.  Despite this, Mr. Bella continued to offer these loans and then attempt to collect on them.

The companies sent requests to debtor’s employers requesting illegal information such as their social security number, hourly wage, and dates of hire.  The companies also sent letters to debtors using the name of an attorney.  However, the attorney had never reviewed the files or determined whether a letter could legitimately be sent.  They continued to reference the attorney’s name even after that attorney no longer worked for them.

Under the terms of the settlement, Mr. Bella agreed to cease the above-referenced practices.  He did not, however, admit any wrongdoing.  He will pay a total of $165,000 in restitution to affected debtors and penalties to the State of New York.  New York Attorney General Eric T. Schneiderman stated that he was “pleased that consumers who paid on payday loans will receive full restitution and Bella will receive heavy penalties.”