Chapter 7 lien stripping a new possibility

We know that you can strip a completely unsecured second mortgage lien in Chapter 13 bankruptcy. However, at least one court (the 11th Circuit Court of Appeals) has ruled that you can strip a second mortgage after filing Chapter 7 bankruptcy, and it looks like the U.S. Supreme Court will decide whether that applies to the whole country.

In Bank of America v. Caulkett, the creditor is appealing the 11th Circuit’s decision that second mortgages can be stripped when they’re completely unsecured, meaning that the balance of the first mortgage is above and beyond the value of the house, such that if the house were to be sold or foreclosed, the second mortgage lender would get nothing.

A 1992 case called Dewsnup v. Timm  has been the law of the land, and Dewsnup held that a partially unsecured second mortgage could not be wiped out in either Chapter 7 or Chapter 13 bankruptcy. In oral argument, the Supreme Court justices seemed to be considering overruling Dewsnup, which would be even a step beyond the 11th Circuit’s decision.

The Supreme Court’s decision is expected to be released later this Spring. If the justices uphold the 11th Circuit, expect more bankruptcy cases to be filed for borrowers who are underwater on second mortgages.

“As is” isn’t a license to rip you off on a used car

Dealers can't hide behind an as-is disclaimer when they knew the car was bad

Photo by Jennifer –

We get a lot of calls from people who have unknowingly bought cars from dealers with serious defects. Generally, when a car is sold it comes with an “implied warranty” that the car will be fit to drive.

But when a consumer lets the dealer know that the car is no good and they want their money back, the dealer will often insist that the car was sold “as is,” and so it’s “not my problem.” But the dealers don’t understand the law–there are many reasons a buyer will have remedies even when the car is sold as is. I’ll break down a few of them here.

1. The car was sold with a warranty or a service contract. Under federal law, a dealer can’t disclaim “implied warranties” in a sale if it sold the car with a warranty or a service contract. So that means that if a car comes with any type of warranty, including Minnesota’s legally-required warranty for used cars under 75,000 miles, implied warranties may apply.

2. The dealer acted in bad faith. Under Minnesota law, a dealer can’t disclaim implied warranties if it acted in bad faith. This might apply if the dealer knew about the problem with the car and lied about it. Or it tried to cover up the problem, before or after the sale.

3. A dealer can’t get off the hook for specific statements it made about the car. “Express warranties” can never be disclaimed. This means that if the dealer said “the car has never been in an accident,” or “this car is in great condition,” or “the check engine light is only on because the car needs a new oxygen sensor” when it actually needs a new engine, it can’t squirm out of those untrue statements by hiding behind “as is.”

Because the dealer says “as is” is their free pass to lie, cheat and steal, people often think they don’t have a claim for auto fraud when they actually might. If you think you were ripped off by a dealer, get in touch.

What to do if your car has missing airbags

Minneapolis auto fraud lawyers

Pamela Carls –

As we discussed in an earlier post, car dealers sometimes sell a formerly wrecked car without disclosing to the buyer that it’s been in a serious accident. Maybe the most shocking is where the dealer repairs the car, but doesn’t replace the airbags (and of course, doesn’t tell the unsuspecting buyer.) In some cases, the airbag compartment has been found filled with packing peanuts or paper towels. Airbags cost $1,000 to $3,000 to replace, and so if the dealer buys the car at auction, fails to make the repair, and doesn’t tell anyone, that’s $1,000 to $3,000 of pure, dirty profit to them. Here are a few steps you can take to detect whether your airbags are missing:

1. Check the airbag compartment. Is there physical damage to any of the airbag compartments? Tears or scratches in the dashboard could be indicators that the airbags have previously been deployed. (more…)

How to know your car is a rebuilt wreck

Minneapolis auto fraud

Photo by Bradley Olin –

Shady car dealers like to find ways to sell bad cars for as much money as possible. A really opportunistic dealer may sell a frame-damaged car with shoddy repairs, not disclosing that the car has serious structural issues. Once a car has sustained serious frame damage, it will often never again be safe to drive, unless very careful and expensive repairs are completed. The safety issues involved in rebuilt wrecks can be severe and possibly life-threatening.

Search the history. One of the ways to find out whether a car is a rebuilt wreck is to search its history. Summary history reports like Carfax and AutoCheck may tell part of the story, so they can be a good first place to look. You might also pull a title history on the car, to see if an insurance company ever owned it, or if it ever had a salvage title. You can pull a title history by contacting the state motor vehicles department in every state the car has been titled. (more…)

Lemon law: What to do if your car is defective

We discussed Minnesota’s lemon law in a previous post. If you think you might have a lemon, we have a few tips that might make it easier to win your case, if you’re not able to resolve your issue out of court.

1. Read your owner’s manual. You want to make sure you’re maintaining your car properly. When you bring your lemon law case, the manufacturer might accuse you of failing to maintain your vehicle properly, and argue that the problem is your fault. If you’ve kept up with the scheduled maintenance (and you can prove it) and you haven’t abused the car, you shouldn’t have any problems. If you can’t find your owner’s manual, you might be able to get an online copy. (more…)

What is the Minnesota Lemon Law?

Friedman Iverson - Minnesota lemon law

Photo by Rob Bertholf –

Minnesota’s lemon law protects you against a new car (sold with a written warranty) that has a problem that affects the use or value of the vehicle. Under the lemon law, for any problem that arises within two years of purchase,  the manufacturer must replace or a refund a vehicle if a serious problem can’t be fixed within a “reasonable” number of attempts.

Minnesota lemon law presumption

In order to use the lemon law, the manufacturer must have made a reasonable number of attempts to repair the vehicle. You don’t have to meet the lemon law presumption to have a case, but it sure helps. The presumption means that a particular number of attempts will be assumed to be reasonable. (more…)

I forgot to add a creditor to my bankruptcy

As hard as we try to find all of your creditors before a bankruptcy, every once in a while one slips through the cracks. What happens when a creditor gets left out?

1. First of all, don’t get any ideas. All creditors are “included” in bankruptcy. You can’t leave one out, purposely or accidentally. So there’s no point in “forgetting” to list a creditor, for example, in hopes that you can keep a credit card open. And remember, you sign your bankruptcy under penalty of perjury, so it’s illegal to leave any information out of your bankruptcy papers. And as your attorney, I know better and won’t let it happen. So don’t try. (more…)

How to deal with an odometer rollback

odometer fraud

A prime candidate for a rollback.

In the post we describe how we can get you triple legal damages, with a minimum of $10,000, and your attorney’s fees paid for, when your odometer has been rolled back.

Shady car dealers love to find a way to make an extra buck on a used car. One way they do this is by rolling back the odometer. WIth digital odometer displays, it is often very easy for a car dealer to roll back an odometer. We sue car dealers for odometer fraud and can get significant legal damages. Here’s how you deal with odometer fraud:

1. Why scammers roll back the odometer. Easy–rolling back the odometer lets a dealer sell a heavily-worn car for newer-car prices. I drive a 2007 Honda Fit Sport. With 50,000 miles a car like mine might sell for $9,676. With 150,000 miles it sells for $5,067. An unscrupulous car dealer might see that $4,600 as easy money. (more…)

Common FDCPA violations in student loan collections

The total amount of federal student loan debt in the U.S. is about one trillion dollars. When a borrower falls behind on payments, the collection process begins. Although federal student loan collectors have impressive collection powers, it’s important for consumers to recognize that the Fair Debt Collection Practices Act still prevents a debt collector from making false or misleading statements or otherwise harassing or abusing a consumer. Here are some of the most frequent FDCPA violations in student loan collections:

Misleading threats to garnish wages. Debt collectors often mislead or lie to consumers about the imminence of a wage garnishment if the consumer doesn’t pay immediately. A federal student loan collector may institute an administrative wage garnishment against a consumer who is delinquent. No judgment is required. But there are important steps that a collector must follow before starting an administrative wage garnishment. They must send the consumer a notice–at least 30 days before starting the garnishment–that advises the consumer of their right to inspect the records related to the debt, their right to a written repayment agreement, and their right to a hearing. The consumer then has 15 days to request a hearing. And a private student loan collector doesn’t have the ability to do an administrative wage garnishment. They have to sue the consumer and get a court judgment first. So, a collector can’t just start a wage garnishment immediately if the consumer doesn’t pay and any threats to the contrary probably violate the FDCPA. (more…)

Turning the tables

I recently sued a debt collection agency and one of its collectors for violating the FDCPA. The collector made some illegal threats to my client. The threats weren’t the worst I’ve ever heard of, but my client was dealing with some other things in his life and was pretty shaken up by them.

Right after they were served with our FDCPA suit, I got a call from the individual collector I had sued. (more…)