Fight odometer fraud with the Federal Odometer Act

According to a 2002 study by the National Highway Traffic Safety Administration, there are over 450,000 cases of odometer fraud each year. The study estimates that the increased cost consumers pay to buy vehicles with odometer rollbacks is over a million dollars per year, which makes it one of the top crimes against property in the United States.

Fortunately, car buyers have a powerful tool to combat odometer rollbacks–the Federal Odometer Act. The Odometer Act has several major protections against odometer fraud:

• It prohibits odometer tampering

• The Act forbids false statements about an odometer reading during a sale

• It requires that a transferor disclose a vehicle’s odometer reading each time it’s transferred

• The Act establishes notice procedures when a repair results in a change to the odometer reading

The Odometer Act allows a person victimized by odometer fraud to bring a lawsuit against anyone who has violated the Act with intent to defraud. Successful litigants are entitled to $10,000 or three times their actual damages, whichever is greater. Further, the rollback artist has to pay for the buyer’s attorney fees and court costs. In addition, the Odometer Act provides for federal agency enforcement and many states, including Minnesota, have criminal penalties for odometer fraud.

We’re Minneapolis auto fraud lawyers who have successfully litigated odometer fraud cases. Get in touch today if you think you’ve been taken advantage of by a odometer rollback.

When Buying a Used Car, Watch Out for Worthless Service Contracts

Buy a new or used car these days and you can expect the salesperson to pressure you to buy a service contract or “extended warranty.” For a fee, which is usually rolled into the financing, these products provide repairs or maintenance for a certain period of time, say 2 years or 24,000 miles. But they rarely provide much benefit to the buyer and often only serve to pad the dealer’s bottom line.

Source: Flickr

Source: Flickr

Here’s an example of what I mean. In a recent case, our client bought a used vehicle with over 100,000 miles on it. The client also bought a service contract for an additional $2,500 or so. The service contract lasted for 5 years or an additional 100,000 miles. Our client rolled the cost of the service contract into his loan for about $50 a month. At this point, you might be thinking this sounds like a pretty good deal.
However, the fine print of the service contract provided for a maximum reimbursement of only $3,000, less a $100 deductible. So the maximum reimbursement was actually $2,900. Further, a great deal of possible mechanical problems were excluded from coverage.
 So, our client paid $2,500 for the right to be reimbursed $2,900. In other words, he paid $2,500 to potentially receive an additional $400, but only if: (a) a problem occurred; (b) the problem occurred during the term of the service contact and (c) the problem wasn’t excluded from coverage. He would have been better of declining the service contract and putting the $50 a month into a savings account. The savings account could have been used for any repair at any time. And if no repairs are necessary, he could have used the money for something else.
Before agreeing to buy any service contract, make sure you understand the total cost (not just the monthly cost), the total amount of coverage, and what is covered and what’s not. Don’t rely on the salesperson to tell you these things, read the terms for yourself. And if you don’t understand the terms, it probably doesn’t make sense to buy it.

Bankruptcy trustees are “clawing back” tuition paid for debtors’ kids

According to an article in the Wall Street Journal, Bankruptcy Trustees are using a legal argument called “fraudulent transfer” to take back tuition payments clients have made 7027599019_ffc018d450_mto their children’s colleges. This can be a shock to people, but trustees do things like this all the time.

Here’s how it works:

Under bankruptcy law, all the property you have at the time of your bankruptcy filing is part of the bankruptcy estate. If you have property above certain exemption amounts, the trustee can demand turnover of that property. This would seem to incentivize people to get rid of assets before filing bankruptcy. You can understand the temptation for someone to sell their boat to their brother for $1.00. (more…)

5 Tips for Streamlining Your Bankruptcy

Go Fast!

Photo by Eric Ward aka a4gpa

The number one thing that slows down a bankruptcy case is the speed with which clients can assemble the necessary documents. By following these five tips, you can ensure that your bankruptcy moves quickly, and that you’re prepared for any issues that could arise during the process.

Go Paperless.

It’s time to get rid of that mountain of paperwork and bills. Sign up to receive digital statements from your bank and financial accounts, and request to receive your pays stubs digitally. It also pays to switch your utilities, mortgage, car payments and regular payments to e-bills. This allows you to stay up to date on your assets and liabilities, and makes submitting your documents to your attorney as easy as sending an email. (more…)

Divorce debts in Chapter 13 bankruptcy

I wrote last week about how to deal with divorce debts in Chapter 7 Bankruptcy. Chapter 13 has different rules and different ways to deal with family court debts.

Photo by Chris Potter

Photo by Chris Potter

1. Chapter 13 can’t discharge domestic support obligations. Domestic support obligations (child support/maintenance) can’t be wiped out in any form of bankruptcy, Chapter 7 or 13. In Chapter 13, to get a discharge the debtor must pay all child support/maintenance arrears, as well as all payments due during the three to five years of the Chapter 13 plan. (more…)

Divorce debts in Chapter 7 bankruptcy



Photo by Magdalena Beckah

Divorce is one of the leading causes of bankruptcy. People often have questions about how to deal with debts from their divorce. Depending on how a debt is categorized in the divorce decree, you might be able to wipe it out in bankruptcy, or it might stick around.

1. Child support and maintenance cannot be discharged in Chapter 7 bankruptcy. Certain debts in bankruptcy are called “domestic support obligations,” including child support and spousal maintenance/alimony. These debts can never be discharged in bankruptcy, and are also “priority” debts, meaning that if the trustee gets any money from you, those debts are paid off first. (more…)

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. (more…)

“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. (more…)

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…)