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 – flickr.com

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 student loan collections 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…)

FDCPA amendment could roll back consumer rights

Last week, a bill was introduced in the U.S. House of Representatives that proposes to amend the Fair Debt Collection Practices Act. If passed, the bill will exempt attorneys from the FDCPA if they are: “serving, filing, or conveying formal legal pleadings, discovery requests, or other documents pursuant to the applicable rules of civil procedure” or “communicating in, or at the direction of, a court of law or in depositions or settlement conferences, in connection with a pending legal action to collect a debt on behalf of a client.” In other words, the bill would provide a safe-harbor from the FDCPA for attorneys engaged in litigation. The text of the bill can be found here. (more…)

Same-sex married couples can file bankruptcy together

We wrote about the evolving status of same-sex couples in bankruptcy here and here. Now that the Supreme Court has struck down the Defense of Marriage Act, the federal government must recognize same-sex marriages valid in the state in which they were performed. Although this specific issue hasn’t come to bankruptcy court, it’s clear that the bankruptcy system will have to follow the Supreme Court’s ruling and allow same-sex married couples to file joint bankruptcy cases.

1. Anyone legally married in Minnesota can file bankruptcy together in Minnesota. Any married couple can file a joint bankruptcy case if their bankruptcy was legally performed in Minnesota. This includes same-sex couples whose weddings were performed on or after August 1, 2013. (more…)

How to deal with student loans

By many accounts, student loan debt has reached crisis levels. Among our clients, it’s a huge issue that can be very difficult to solve. As total student loan debt in the United States approaches $1 trillion, many borrowers are going into default. On federal student loans alone, the number of people who went into default during the first three years after graduation was a staggering 13.4 percent. There are a few things borrowers can do to deal with runaway student loans.

1. If the loan is not in default. If a federal student loan is not in default, there are numerous repayment options available, including Income Contingent Repayment (ICR) and Income-Based Repayment (IBR). Each of these programs allow a borrower to pay a percentage of his income to his loans (sometimes as low as zero percent) and the remaining debt is forgiven after a number of years (20-25). The government has a web site that allows you to explore these options.

2. If the loan is in default. A federal loan goes into default if it has not been paid for more than 270 days. Once default occurs, repayment plans like IBR and ICR aren’t available anymore and the student lender can (and will) tack on a 25 percent collection fee to the balance. The lender can then garnish wages, etc. If a loan is in default, your best bet is rehabilitation. To rehabilitate the loan, the borrower makes “reasonable and affordable” payments for 9 out of 12 months. Once these payments have been made, the loan can brought back out of default. Once it’s out of default, ICR and IBR are on the table again.

3. Discharge outside bankruptcy.  A federal loan can be administratively discharged by the U.S. Government for a few reasons. These include things like the borrower becomes totally disabled or the school closes while the borrower is attending. These debts are discharged by a borrower submitting a form to to the lender.

4. Private student loans are a whole different story. Private student loans have hardly any of the protections that a federal student loan borrower has. If a borrower goes into default on a private loan, his best bet is just to negotiate with the lender for an affordable payment plan. On the other hand, private student lenders have to sue you to collect their money, while federal lenders can skip the legal process and go right to garnishment.

5. Discharge in bankruptcy. Contrary to popular belief, student loans can be discharged in bankruptcy, but it’s not always easy. A student loan can be discharged if paying it would cause “undue hardship” to the borrower. It’s not totally clear what this means, since different courts have interpreted this in different ways, but it’s definitely something more than just not being able to afford to pay off loan on a borrower’s current income. A borrower generally has to show that she will never be able to pay off the loan to have it wiped out in bankruptcy.

6. Payment plans in Chapter 13. One last option for borrowers struggling to pay private loans is Chapter 13 bankruptcy. In Chapter 13, a borrower can force the lender to enter a repayment plan over a five-year period.  This can be necessary where a borrower is being sued and the lender is demanding the full amount to be paid at once “or else.” The downside to this approach is that if the court-ordered payments are low enough, interest will accumulate faster than it’s paid off and the borrower will owe more at the end of the five years.

We can help explain any of these options to you. Get in touch if you want to discuss how to deal with student loans.

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Changes to Minnesota court rules affect debt collection lawsuits

On July 1, 2013, some pretty significant changes to the Minnesota Rules of Civil Procedure went into effect. The amendments deal primarily with the initial stages of litigation and could have a big impact on debt collection lawsuits here in Minnesota. The full text of the amendments can be found here.

Cases must be filed within one year of commencement

The new rules require that all civil cases served after July 1, 2013 must be filed with the court within one year of the date of service. Under the old rules, there was no deadline for filing the case with the court. Now the plaintiff must file the case within a year of serving it or it will be dismissed with no opportunity to refile.

I’m sure that the debt collection law firms have put procedures in place to ensure that all cases get filed within a year, but it wouldn’t surprise me if some cases fall through the cracks and don’t get filed. This would be a huge win for a consumer, because if the case is dismissed with prejudice (meaning no right to refile), it can never be brought again.

Mandatory initial discovery disclosures

Another big change involves the way that the early stages of the case proceed. Under the new rules, the parties must make mandatory discovery disclosures within 60 days of the initial due date of the answer. The new rule requires the parties to disclose (1) the name of all persons with discoverable knowledge in the case, (2) a copy of the documents that relate to the case, and (3) the plaintiff must provide an itemization of damages.

I’m interested to see how the debt collection attorneys respond to this rule. Typically, they don’t have access to any documents from their client at the early stage of the case. I think they could comply with the new rule by disclosing what they have and updating later when they receive more documents. I had initially hoped that the this new rule would eliminate the need for extensive discovery later in the case, but that will only happen if debt collection attorneys take the spirit of the new rule seriously.

Mandatory early discovery conference

The parties are required to meet and confer within 30 days of the initial due date of the answer. The purpose of the meeting is to discuss the discovery phase of the case and to prepare a written report to the court that contains the parties’ discovery recommendations. Under the old rules, no such meeting or report was required.

This discovery conference is unnecessary in most consumer debt collection cases. There are rarely discovery issues to be discussed and discovery disputes are pretty rare. I think it’s a good idea in other types of cases, but in debt collection cases it’ll only add to the cost of litigation without offering any meaningful benefit.

Optional court discovery conference

In addition to the mandatory discovery conference between the parties, the new rules give the court the option of having an early discovery conference with the judge.

I suspect that most judges will forego this conference in debt collection cases, but I could see some judges using it as an opportunity to get the parties together and urge them to settle.

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