SoCalCreditDamage.com Blog

Hello Readers,

Another wonderful byproduct of our credit crisis is banks and credit cards cutting credit limits for very minor reasons, or for no reason at all. Business Week today wrote an article on this and I think it’s worth re-printing and reading. Hope it is of use to you & thanks for reading. Here’s the article:

Credit-Card Companies: Who Qualifies Now?
by Prashant Gopal
Wednesday, June 24, 2009 provided byBusinessWeek

After years of getting Americans hooked on credit, card companies are slashing limits and weaning themselves off all but the safest customers

Terry Mazzera has worked to keep her credit score above 730, paying bills on time, sending in more than the minimum credit-card payment each month, and keeping a comfortable gap between her balance and credit limit.

But a couple of weeks ago, the 62-year-old Hercules (Calif.) resident got a letter from a credit-card company saying that her limit had been cut from $9,500 to $6,500—just about $400 above the amount she owed on the card. The primary reason: She was a late on a payment on a separate department store card.

Debt-to-Limit Ratios

Her debt-to-limit ratio on the card suddenly zoomed up from 64% to 94%, and she expects her credit score will be damaged. The ratio is a key component that credit bureaus use to determine creditworthiness. “It’s not right,” said Mazzera, a project assistant at a construction company. “I worked very hard to keep my credit.”

Mazzera is part of a growing number of Americans who are seeing their credit limits slashed. Even people with good jobs, low balances, and solid payment histories could be seeing their credit scores slip through no fault of their own. About 16% of customers had their limits reduced between April 2008 and October 2008, according to a recent study by Minneapolis-based FICO, which developed the Fair Isaac scoring model used by credit bureaus to evaluate default risk.

But only a fraction of those customers would be considered risky. Jittery banks, eager to reduce potential risk, appear to be targeting many borrowers with low-balance or inactive accounts. About 11% of customers who saw their limits cut had no “risk triggers” during that period and generally had very high credit scores. Risk triggers include late payments, excessive cash advances, check bouncing, collecting unemployment, or having a mortgage in an area where property values are plummeting.

Credit Scores at Risk

“This is blindsiding people,” said Evan Hendricks, author of Credit Scores & Credit Reports (Atlas Books). “For a significant portion of people having their credit scores go down, it had nothing to do with what they did. This is the system making credit scores go down. This is a new thing in history.”

There’s no way to know how many good credit scores are being lowered by the credit limit cuts. FICO said its study showed that borrowers whose available credit was cut did not see a change to their median FICO score, which remained at 770. But the survey ended in October 2008, just as the financial crisis was beginning. It’s unclear what has happened since then.

Even a small FICO score drop in today’s environment of tight credit can make the difference in getting a mortgage, a car loan, or another credit card, and it can have an impact on the interest rate a borrower pays. The FICO score ranges from 300 to 850 and the best mortgage rates are generally given to borrowers who have at least about 730.

The credit limit reductions are confusing to customers because many borrowers have credit cards so that “when a rainy day comes along they can use it,” said Linda Sherry, spokeswoman for Consumer Action, a San Francisco-based nonprofit consumer education and advocacy group.

“It’s hard for consumers to understand because before the credit-card companies were almost pushing credit,” Sherry said. “Now they’re taking it back, even for people who were doing nothing wrong.”

Rising Default Rates

Banks are cutting limits in the face of a deteriorating economy. U.S. credit-card default rates reached record highs in May, near or even above 10% for Bank of America, American Express, Citigroup, and Capital One, according to Reuters. The worsening unemployment situation is causing banks to worry that even good customers could quickly become risky customers. As a result, the companies are preemptively slashing credit lines, especially those that aren’t being used.

“The single biggest indicator of a person’s ability to repay is whether they have a job, and economists say unemployment could hit 10%,” said Peter Garuccio, spokesman for the American Bankers Assn. “Issuers say their losses track closely with unemployment and they have to minimize exposure.”

Garuccio said some customers who think they’re excellent customers might be riskier than they think. Somebody who just pays the minimum payment each month isn’t the ideal customer, he said. “Somebody who is paying more than the minimum and not carrying a balance is a great customer.”

From Ideal Customer to Liability

Curtis Arnold, founder of Cardratings.com, said the same customers that banks were aggressively soliciting are now making them nervous.

“The irony of this is that somebody who carried a balance was their [the banks’] bread-and-butter customer,” Arnold said. “Now that same customer is a threat.”

The banks might be tightening available credit in reaction to new federal legislation, taking effect in the middle of next year, that will restrict how credit-card companies raise rates. Among the other rules designed to benefit customers, banks will only be able to hike rates on existing balances if a customer is 60 days late on a payment, and it must provide 45 days’ advance notice before increasing rates.

It pays in this environment to keep the balance-to-limit ratio below a third and keep a close eye on any changes to credit reports, experts say. Author Hendricks suggests consumers try to pay down balances or convince lenders to restore limits. Borrowers can access a free credit report once a year from each of the three credit bureaus at www.annualcreditreport.com. On Myfico.com, customers can buy their TransUnion and Equifax FICO scores for $15.95 each. Experian sells reports and scores on Experian.com.

Gopal writes about real estate for BusinessWeek in New York.

Lots to write about today!

Larger debt collectors frequently contract with attorneys, mostly just to use their legal letterhead for their letters. Obviously, when a consumer gets a letter from a lawyer, the prospect of being sued looms larger and the consumer is all the more intimidated by the debt collector contact.

There are debt collection lawyers out there, but attorneys who actually engage in regular debt collection tend to focus on larger debts and do not spend their time on smaller debts of less than $5,000. However, when a large debt collector hires the use of the legal letterhead of a “rent-a-lawyer,” then the debt collector (usually not the lawyer) will send “lawyer letters” to consumers for smaller debts.

How can you tell? Usually, when a large debt collector has hired the legal letterhead of a “rent-a-lawyer,” the return number for you to call will be an 800 (or 866) number, which will ring straight through to the debt collector, not the lawyer’s office. Quite often, the letter will be postmarked from a state different than the state where the lawyer’s office is located.

How to handle this when it happens to you? Go to the state bar website for the state from which the letter is coming from and get the lawyer’s office address. Send a certified letter, demanding validation of the debt FROM THE LAWYER, and also demanding a disclosure of the relationship with any debt collector that might be collecting on the debt.

Lawyers hate threats of reports to the state bar in which they practice, so I would not randomly threaten a state bar complaint, but indicate in your letter that if the LAWYER (not the debt collector) fails to address your letter, then you will report the matter to the state bar.

Hope this helps!

Hello Readers,

Here in Southern California, we’re finally getting spring/summer weather, finally! We’ve had about the gloomiest May/June that I can remember. Glad to see the sun returning.

A definite pattern we are seeing: debt collectors contact alleged debtors for OLD, OLD, OLD debts, trying to collect them. Remember two key principles under California law:

1. Statute of limitations (time within which lawsuit must be filed or creditor loses all rights) is four years for written contracts, two years for verbal or non-written contracts.
2. If you make a payment on a debt, or an alleged debt, beyond the statute of limitations, you effectively restart the clock and then may well be legally obligated to repay the debt. So, if you believe that a debt is past the statute of limitations, DON’T MAKE A PAYMENT!!!!!

The other thing I’m advising my clients who are contacted by debt collectors on these old debts is to insist on receiving the original contract by which you incurred the debt. The debt collector will almost never have it. Most often, particularly with very old debts, the debt buyers buy big portfolios of debts which they will often know are “past-statute,” or, better yet, “bankruptcy-discharged.” They then try to collect on it. The only thing they get in their portfolio from the creditor, or the previous owner, is a short one-page computer print-out of the debt, nothing more. The debt collectors do not receive the original contract and they do not receive any billing statements or account statements, so really they cannot prove a darn thing.

If you insist on receiving the original contract, quite often the debt collector will drop the case because it does not have it and cannot get it. Without the original contract, the debt collector cannot prove that you incurred the debt or the terms upon which you incurred the debt.

And, if the debt collector credit-reports you after failing to provide you with the original contract, this may well be a violation of the credit reporting laws.

Always communicate with debt collectors via certified mail. Always.

Hello Readers,

Just last week, a judge in Orange County, Andrew Guilford (while a practicing attorney, he’s the one who represented the City of Anaheim against the “Los Angeles Angels of Anaheim,” and lost) has ruled against Arizona-based LifeLock in its ongoing litigation against credit bureau Experian.

The essence of Experian’s claim is that LifeLock lacks the legal capacity to re-set fraud alerts on consumer accounts. According to the Fair Credit Reporting Act, the re-setting of a fraud alert needs to be done by the consumer himself, or herself; it cannot be done by some company acting on the consumer’s behalf.

As a practical matter, it’s very easy to set, and to re-set, a fraud alert. You just need to put on your calendar (or in your Blackberry) a reminder to re-set it every 90 days. It’s a matter of a couple of phone calls and there’s no need to pay LifeLock for the service. So, while I’m not always a big fan of the credit bureaus, on this one I think Experian deserves to win.

The net effect of this ruling is that LifeLock may well have to radically change its business model, or cease operations altogether. LifeLock’s “stock in trade” has been the automatic re-setting of fraud alerts, so it may well have to reshape its business model.

The ultimate moral of this story is that you should always try to straighten out any bad credit situation yourself before engaging LifeLock or any other “credit clean-up” company out there. If you cannot clean up false or inaccurate information on your credit report, you definitely need an attorney familiar with the Fair Credit Reporting Act, and I would never suggest a mass-production company like LifeLock to anyone for cleaning up false credit information.

I hope your June is off to a good start!

Bob Brennan

Hello readers, and thank you for tuning in.

I’m frequently approached by persons with seemingly perfect credit profiles–steady long-term job, good income, manageable debt levels, good health, income greater than expenses, savings and investments, no recent derogatory credit blemishes–who do not have perfect credit scores. One would imagine that a consumer with these qualifications would have a credit score of 750+++, even over 800. I myself have frequently puzzled over why such a consumer would not have the highest possible credit score.

I have, off and on, research this phenomenon for the past couple of years and, without having had this confirmed by the Fair Isaac Company, I believe I have finally reached an answer:

Consumers with the best credit scores are those consumers who reliably make the most money for the lending industry.

In other words, the VERY BEST consumers in the eyes of the consumer credit and lending industries are those who MAINTAIN HIGH BALANCES ON MULTIPLE CREDIT ACCOUNTS, BUT NEVER MISS A PAYMENT AND HAVE A LONG HISTORY OF KEEPING HIGH BALANCES BUT NEVER MISSING PAYMENTS. These are the consumers who make the most money for the consumer credit industry, because they borrow a lot, they pay a lot of interest and they can be relied upon to make timely payments.

These types of consumers are usually the ones with the 750+++ credit scores. They have the best credit scores because the Fair Isaac Company essentially works for the consumer credit industry, and ultimately what Fair Isaac strives to do is to identify the best possible consumer credit customers. Just as with a restaurant or a casino, the best customers are those that buy the most but also reliably pay for it on time.

More frugal (and, in my view, sensible) consumers who pay with cash when they can, use credit on a limited basis, keep their balances low and pay off their balances frequently, thereby avoiding interest charges, are actually better credit risks but lenders cannot make as much money from the frugal types. The frugal types ultimately can build up their credit scores to 750+++, but it tends to take longer.

The real winners of the credit scoring game are those individuals who use a lot of credit but who also have a pretty long history of never missing a payment. However, living this type of life just to get a high credit score is senseless–any period of unemployment or sickness can wreck the ship quite quickly.

Better, in my view, to read “Richest Man in Babylon” and follow the money management principles therein, including avoiding debt at all cost, paying off one’s debt as a life priority, building savings and investments and continuously living within one’s means and income. When unemployment or disability strikes such a person, usually the person has sufficient reserves and a sufficiently low debt that he or she can weather the storm.

I hope this short piece has been useful to you, and thank you for reading.

Bob Brennan

Hello Readers,

Hope your May is off to a good start. We’re all behind any prediction that the worst of the economic mess is over and the country is on its way to a recovery.

Here’s a piece I picked up from a Michigan blog, which mirrors some cases we’ve been seeing. Obviously this type of conduct is a violation of the Fair Debt Collection Practices Act, and if anything like this is happening to you, give us a call. Here’s the article:

Bizarre Debt Collectors’ Tactics

The Michigan Collection Law Blog has posted an article about “outrageous debt collectors’ actions.” It gives two examples of creditor harassment that violates the Fair Debt Collection Practices Act.

A man was delinquent on his Mercedes payments and the collection agency Universal Tracing Services, Inc tracked down his daughter on Myspace and sent her the following message:

We have been retained by, JPMorgan Chase Bank, to locate and repossess their missing collateral a 2007 Mercedes GL 450. Please contact our office immediately so we can discuss the peaceful recovery of the collateral. Failure to contact me will result in further action against your father James Ricobene. Legal options range from having a replevin order served on you or even worse reporting the collateral as stolen to local authorities in Illinois under the A.R.S. act 18-5-504. Failure to comply with this notice of surrender is a class 5 felony and carries a maximum penalty of imprisonment for two years plus all applicable surcharges. You must contact the writer within 5 days to prevent this action from taking place. You can contact me directly at 800-667-7704 ext 222 or directly at 604-267-1581 ext. 222

Awaiting your immediate response.

Chris Flanagan
Senior investigator

The second example involves a woman who was also behind on car payments. Her car was repossessed and then she was told there was a hidden GPS in the car to track it. She got the car back, but fell behind on payments again. This time Auto Financing Network bought a URL with the name “Jennifer Dicks isn’t paying for her Cavalier.” They also sent her inappropriate and harassing text messages:

April 10:

Can you quit playing games and give me the car?

April 11:

I’m 2 miles away coming to your house…are you home? Neeee the car.

April 15:

You need to call me…This isn’t fair to me. Do you have no soul?

April 18:

All you do is lie. It isn’t registered to you so call again. I wish you died when you fell off the roof. If ur not married good. He can do soooo much better.

If you have had problems with debt collector harassment that violates the Fair Debt Collection Practices Act, feel free to contact us.

Dear Readers,

Here’s an email exchange I believe should be helpful to a lot of you out there. This is a situation where a debt collector contacts a consumer after serving a summons on the consumer for a very old debt, one likely past the statute of limitations. As with all business dealings, DON’T PAY ANYTHING UNLESS AND UNTIL THEY SHOW YOU THE PAPERWORK TO PROVE THAT THE DEBT IS WITHIN THE STATUTE OF LIMITATIONS, AS WELL AS THE CORRECT AMOUNT OF THE DEBT!!!!! Can I repeat that often enough? Probably not. Here’s the email exchange and hope it helps you out. Thanks for reading.

[Email to Bob Brennan] “I incurred the debt some years ago and my original thought was that it was past the statute of limitations regarding collection of credit card debt (which I understand to be 4 years in California) but when I looked at my credit report it then seemed that they might have beat the 4 year period by about a month. I did a bit of looking and could not find anything concrete that showed that the debt had been delinquent for more than 4 years, so I decided to call the law office listed on my summons today to see if we could work something out that was a bit more reasonable than the amount they stated on the summons (which is 4600 dollars or so which to me seemed kind of ridiculous to me seeing as my original limit on the card was 2200). The guy I got on the phone said that the amount we were looking at now was actually 6600 because the law office was involved and the best settlement he could come up with was roughly 3600 if I agreed and could pay 1/3 of that today, and then the rest over the next 2 months, which I can’t swing at the moment. The other option from him was to start smaller payments today on the total 6600 to avoid going to court. He also told me that today might be the last day this is on the table since it was the last day of the month today, I am not sure how much of that was to try to scare me into making a bad decision or what. That did not seem all that reasonable to me, so I thought I might want to get in touch with a lawyer who specializes in this type of thing since I don’t think I am going to be able to make any progress on my own, or even figure out what I need to send back to the courts within the thirty day window I have. I have one or two other places I plan to look to try to find an old statement from the CC company that would show it was delinquent before they are saying it was, but I am not overly optimistic about finding something (sadly I was/am young and not so great with paperwork…).”

[Bob Brennan’s response] “Doesn’t sound to me like you’ve got anything to lose by fighting it in court. Debt collectors always try to get you to pay TODAY, but if they don’t have the paperwork to back up the claim, then don’t pay them and roll the dice in court. No guarantees but you may find yourself doing better or even getting the case dismissed on statute of limitations grounds. Contend statute of limitations at the trial and state that your best recollection is that the debt is well over 4 yrs. old, you have requested the back-up paperwork on the debt and the debt collector has not provided it to you. The 4 yrs. would begin to run on the date of first delinquency—you can also contact the original creditor and try to get the info from them.

Just my thoughts but I would not let them Shanghai you if they cannot provide you with the paperwork to back up their inflated claim. Where do they get the $6600 anyway? Is it in the contract? Make ‘em prove it! It’s probably a bunch of bunkum just designed only to line the pockets of the debt collector.”

WHAT TO DO—AND WHAT NOT TO DO—WHEN YOU ARE CONTACTED BY A DEBT COLLECTOR.
By Robert F. Brennan, Esq.

Debt collectors prey on consumers who do not know their rights and who do not know how to handle calls from debt collectors. This article gives just a few short and simple tips for handling debt collector calls, since these are becoming ever more common as the market for “junk debt” booms among unscrupulous investors.

DO’S
The following is a short list of things you should do and must do when contacted by a debt collector:

DO insist that the person calling you to give their name (their real name, since career debt collectors usually use an alias when doing debt collecting);
DO find out very specifically the address from which the debt collector is calling you;
DO advise the debt collector that you will be recording the current call and all future calls;
DO keep a journal, or log, of the date and time of all debt collector calls along with the person to whom you spoke and the full contents of the discussion, particularly including the full contents of any threats;
DO insist that the debt collector send you, in writing, a confirmation of any factual statements or representations made during the phone calls, and also record any factual statements or representations in your journal;
DO get as much detail about the debt as the debt collector will give you: original creditor, principal sum of debt, interest on debt, any fees or penalties being added by the debt collector;
DO tape-record the call and all future calls from the debt collector, but only after you have advised the debt collector that you will be tape-recording the calls and captured your own voice on tape stating that you would be tape-recording all calls;
DO make copies of all tape-recorded calls or voicemails onto CD or similar storage medium, and keep these in a safe place, as these will be invaluable in the event of a lawsuit against the debt collector;
DO write a debt validation letter after you receive the debt collector’s first correspondence, and specifically request the complete back-up documentation from the original creditor about the debt, including your original, signed contract with the original creditor and the original creditor’s payment or account history for the debt (debt collectors will usually reply with their own short-hand computer print-out about the debt, which really tells you nothing about the debt);
DO include in your debt validation letter a statement that you will be tape-recording all future telephone calls from the debt collector;
DO send the debt validation letter, and all correspondence to the debt collector, via certified mail, return receipt requested, and keep a file with all of the mail receipts to show that your letters were accepted and received by the debt collector;
DO advise the debt collector, both in your phone calls (with your voice recorded) and in your letters that you positively do not consent to having your friends or family or employer contacted in any way;
DO advise your friends and family of the debt collector’s efforts to contact you, and that you would want your family and friends to keep a record of all calls or contacts, as well as statements made, by the debt collector to them;
DO discuss with your employer, only if necessary and in your best judgment, that a debt collector may contact them and you have not consented to the debt collector contacting the employer;
DO dispute any false or inaccurate credit reporting about the debt with the credit bureaus. (Go to www.socalcreditdamage.com for a sample dispute letter to the bureaus.) Remember that you want to dispute any false or inaccurate credit information. If you positively do not owe the debt, then the very existence of the debt in your name is false and inaccurate. However, there are many other instances of false or inaccurate credit reporting: wrong amount of debt; wrong date of default or delinquency; wrong characterization of debt, e.g. “30-day late delinquency” being reported as a “foreclosure” or a “repossession”; etc.

DON’TS
Now that we’ve visited a few of the “do’s”, it’s also time for a few “don’ts”.
DON’T agree to pay on the first phone call. Debt collectors receive special training to try to talk debtors into paying with a credit card or a check-by-phone on the very first phone call. You always want to digest the information from the debt collector before agreeing to any payment of the debt. Remember: you may not owe the debt, or the debt collector may have inflated the debt with bogus fees and penalties not found in your original contract. That’s one reason you want the original creditor’s contract, so you can see if you really are obligated for anything beyond interest. A lot of the time, the interest will be the only penalty you have ever actually agreed upon, so you do not want to overpay the debt collector;
DON’T ever consent to permit the debt collector to contact your employer or your family and friends;
DON’T ever provide the debt collector with any of your personal employment or financial situation, even if they ask, i.e. do not tell them where you bank, where you work or any other details of your personal financial or employment information;
DON’T believe a debt collector if he or she tells you that you are about to be arrested or subjected to other criminal-type treatment;
DON’T believe a debt collector if he or she states that she is from a law enforcement agency;
DON’T hesitate to end the phone call when YOU want to end the phone call—the debt collector will try to keep you on the line as long as possible;
DON’T return debt collector calls—better practice is to do everything in writing;
DON’T forget to tell your friends to buy and read Robert F. Brennan’s new e-book for California consumers, “Debt Collection Answers: How to Use Debt Collection Laws to Protect Your Rights.” The link for purchasing the e-book is below. It gives a full account of your rights as a consumer faced with debt collectors, and includes useful forms and checklists for preserving your rights and dealing with debt collectors on even ground. Here’s the link:
http://www.facebook.com/ext/share.php?sid=69106944400&h=KUaGi&u=iicP3&ref=mf

I hope this short article has been of assistance to you. Thanks for taking the time to read it.

Bob Brennan

Copyright © 2009 by Robert F. Brennan, Esq. All rights reserved.

Hello Readers,

I’m reprinting an article from today’s (March 10, 2009) New York Times on how debt collectors are now profitably collecting from the relatives of dead people.

REMEMBER TWO KEY THINGS:

1. YOU MAY WELL NOT HAVE ANY OBLIGATION TO PAY THE DEBTS OF A DEAD RELATIVE. You need to consult with the attorney who handled the estate, if any. If there was no estate, then likely you are not obligated to pay any of the departed’s debts because the only claim would, under most circumstances, be against the estate. There are a handful of exceptions to this but you’ll need to speak with an attorney in your own state to determine if your situation presents one of the exceptions. Otherwise, YOU DON’T OWE THE MONEY and you don’t have to repay it.
2. THE SAME DEBT COLLECTION ABUSE LAWS THAT PROTECT YOU AS A CONSUMER ALSO PROTECT YOU AS A FAMILY MEMBER OF A DECEASED DEBTOR! That means, no abusive calls or misleading tactics, no “gestapo techniques,” etc. MOST IMPORTANT: IF A DEBT COLLECTOR THREATENS YOU WITH A LAWSUIT OVER A DECEASED RELATIVE’S DEBTS, IT IS QUITE POSSIBLE, EVEN LIKELY, THAT THE DEBT COLLECTOR HAS NO ABILITY WHATSOEVER TO PURSUE YOU FOR THE DEBT! However, to make sure, you will need to consult with a local attorney if this situation does come up. If a debt collector threatens you with a lawsuit when you cannot be sued for the debt, that is a positive violation of debt collection abuse laws.

Here’s the article:

You’re Dead? That Won’t Stop the Debt Collector
by David Streitfeld
Sunday, March 1, 2009

provided by
The New York Times

The banks need another bailout and countless homeowners cannot handle their mortgage payments, but one group is paying its bills: the dead.

Dozens of specially trained agents work on the third floor of DCM Services here, calling up the dear departed’s next of kin and kindly asking if they want to settle the balance on a credit card or bank loan, or perhaps make that final utility bill or cellphone payment.

The people on the other end of the line often have no legal obligation to assume the debt of a spouse, sibling or parent. But they take responsibility for it anyway.

“I am out of work now, to be honest with you, and money is very tight for us,” one man declared on a recent phone call after he was apprised of his late mother-in-law’s $280 credit card bill. He promised to pay $15 a month.

Dead people are the newest frontier in debt collecting, and one of the healthiest parts of the industry. Those who dun the living say that people are so scared and so broke it is difficult to get them to cough up even token payments.

Collecting from the dead, however, is expanding. Improved database technology is making it easier to discover when estates are opened in the country’s 3,000 probate courts, giving collectors an opportunity to file timely claims. But if there is no formal estate and thus nothing to file against, the human touch comes into play.

New hires at DCM train for three weeks in what the company calls “empathic active listening,” which mixes the comforting air of a funeral director with the nonjudgmental tones of a friend. The new employees learn to use such anger-deflecting phrases as “If I hear you correctly, you’d like…”

“You get to be the person who cares,” the training manager, Autumn Boomgaarden, told a class of four new hires.

For some relatives, paying is pragmatic. The law varies from state to state, but generally survivors are not required to pay a dead relative’s bills from their own assets. In theory, however, collection agencies could go after any property inherited from the deceased.

But sentiment also plays a large role, the agencies say. Some relatives are loyal to the credit card or bank in question. Some feel a strong sense of morality, that all debts should be paid. Most of all, people feel they are honoring the wishes of their loved ones.

“In times of illness and death, the hierarchy of debts is adjusted,” said Michael Ginsberg of Kaulkin Ginsberg, a consulting company to the debt collection industry. “We do our best to make sure our doctor is paid, because we might need him again. And we want the dead to rest easy, knowing their obligations are taken care of.”

Finally, of course, some of those who pay a dead relative’s debts are unaware they may have no legal obligation.

Scott Weltman of Weltman, Weinberg & Reis, a Cleveland law firm that performs deceased collections, says that if family members ask, “we definitely tell them” they have no legal obligation to pay. “But is it disclosed upfront — ‘Mr. Smith, you definitely don’t owe the money’? It’s not that blunt.”

DCM Services, which began in 1999 as a law firm, recently acquired clients in banking, automobile finance, retailing, telecommunications and health care; DCM says its contracts preclude it from naming them.

The companies “want to protect their brand,” said DCM’s chief executive, Steven Farsht. Despite the delicacy of such collections, he says his 180-employee firm is providing a service to the economy. “The financial services industry is under a tremendous amount of pressure, and every dollar we collect improves their profitability,” he said.

To listen to even a small sample of DCM’s calls — executives played tapes of 10 of them for a reporter, electronically edited to remove all names — is to reveal the wages of misery, right down to the penny.

A man has left credit card debt of $26,693.77, the legacy of a battle with cancer. A widow says her husband “had no money. He pretty much just had debt.” Asked about an outstanding account of $1,084.86, a woman says the deceased had no property beyond “some tools in the garage” and an 18-year-old Dodge.

Not everyone has the temperament to make such calls. About half of DCM’s hires do not make it past the first 90 days. For those who survive, many tools help them deal with stress: yoga classes and foosball tables, a rotating assortment of free snacks as well as full-scale lunches twice a month. A masseuse comes in regularly to work on their heads and necks.

Brenda Edwards, one of DCM’s top collectors, spoke with a woman in New Jersey about her mother’s $544.96 credit card bill.

“She had no will, no finances, nothing,” the daughter said. “Nothing went to probate.” The $200 in the checking account was used for funeral expenses. But the woman also said the family “filed a form with the county,” indicating that perhaps there was a legal estate after all.

“Is anyone in the family in a position to pay this?” Ms. Edwards asked, adding: “I’m not telling you it needs to be paid at all.”

The woman reached a decision. “I will talk to my brothers and sisters and we will pay this,” she said.

Ms. Edwards has a girlish voice that sounds younger than her 29 years. “If you plant a seed and leave on a good note, they’ll call back and pay it,” she said.

DCM started a Web site called MyWayForward.com to provide the bereaved with information, tools and, some day, products. “We will never sell death. But it’s O.K. to provide things that could be helpful to the survivor,” Mr. Farsht said. Death will be the end of one customer relationship but the beginning of another.

Some survivors are surprised, and a few are shocked, that they are hearing from a collector.

Eric Frenchman, an online consultant, said a DCM agent inquired about his late father’s $50 Discover card balance before the bill was even due. Since Mr. Frenchman had been planning to pay it anyway, he emerged from the experience vowing never to get a Discover card himself.

The major deceased-debt firms say such experiences are rare. Adam Cohen, chief executive of Phillips & Cohen Associates of Westampton, N.J., said his team of 300 collectors “are all trained in the five stages of grief.”

If a relative is more focused on denial or anger instead of, say, bargaining, the collector offers to transfer him to the human resources company Ceridian LifeWorks, where “master’s level grief counselors” are standing by. After a week, the relative is contacted again.

DCM executives say some of the survivors not only gladly pay but write appreciative notes. They offered up a stack, with the names deleted, as proof.

One widow wrote that a collector “was so nice to me, even when I could only pay $5 a month a few times.” Saying that money was “so tight” after her husband died, she added: “It was very hard for me, and to get a job at my age. Thank you.”

Greetings Friends and Colleagues,

Debt Collector activity, and debt collector abuse, is spiking with the ongoing economic troubles we all are facing. More and more banks, finance companies, retailers, etc. etc. are getting more aggressive, and abusive, about collecting debts with the growing economic pressures. In this light, I published an e-book with two co-authors, addressed in plain language on how to protect and defend your rights should you have debt collectors hounding you. By the way, having debts or nasty debt collectors is no longer “the Scarlet Letter” in this society; directly or indirectly, we all have debt problems and we should cooperate with each other and help each other along to handle them, as this of itself would cure many of the country’s, and the world’s, economic woes. I hope the book proves useful to you and thanks for taking the time to read this message!

California Attorney Dispenses Advice & Information to Debt-Stressed Consumers in
New Book: Debt Collection Answers: How to Use Debt Collection Laws to Protect Your Rights

Book Empowers Californians As Complaints About Debt Collectors Soar

Los Angeles, CA – February, 2009 – Los Angeles attorney Robert Brennan with the Law Offices of Robert F. Brennan and a noted consumer law attorney, is the co-author of a new book, Debt Collection Answers: How to Use Debt Collection Laws to Protect Your Rights. The book educates California consumers about their debt collection rights. Brennan’s co-authors are Gerri Detweiler, a nationally-known personal finance expert, and personal finance writer Mary Reed.

Debt Collection Answers, CA Edition provides California consumers who are drowning in debt with a financial life raft. The book details what they should and shouldn’t do when a debt collector contacts them and tells them how to exercise their debt collection rights. “When consumers are struggling financially, being pressured by debt collectors only adds to their problems”, says Brennan. ”Furthermore, many consumers respond to debt collectors in ways that make their situations worse, not better. My new book provides them with the information they need to handle calls from debt collectors.”

Among other things, Debt Collection Answers, CA Edition explains:
• The debt collection protections provided by California’s Rosenthal Act and by the federal Fair Debt Collection Practices Act.
• What to do when a debt collector contacts you the first time.
• What to say (and not say) when you talk to a debt collector.
• What debt collectors can really do to collect money from you.
• How to respond to high-pressure debt collection tactics.
• How to settle debts for less than the full amount.
• When you need the help of a consumer law attorney.

The book also includes sample letters to write, a worksheet for recording the details of conversations with debt collectors, and an interview about debt collection tactics by a former debt collector.

Aggressive debt collectors are an increasing problem in the U.S. According to the Federal Trade Commission, more complaints were received in 2007 about the debt collection industry than any other industry. Common complaints include harassment by debt collectors who called repeatedly and/or used threatening or profane language and debt collectors who threatened consumers with illegal actions.

-over-

Debt Collection Answers is available for purchase at http://www.debtcollectionanswers.com in a downloadable digital version for $14.95.

About The Authors
Attorney Robert Brennan grew up steeped in the legal tradition: his uncle was former U.S. Supreme Court Justice William J. Brennan, Jr. (deceased), and his father, Frank Brennan, was chief in-house counsel for several major U.S. corporations during his long career.
Robert Brennan began his career in civil litigation in 1988, and opened his own general practice firm, The Law Offices of Robert F. Brennan in 1991 (www.brennanlaw.com).The firm specializes in litigating cases related to violations of consumer protection laws, including unfair and abusive debt collection, lemon law, automotive dealer fraud, wrongful credit damage, personal injury, and consumer protection class actions.
An experienced and aggressive trial lawyer with an excellent win record, Brennan has a wide range of successful litigation experience, including medical malpractice, consumer fraud (including consumer warranty and “lemon law” issues), personal injury, and business litigation. He is also a nationally recognized speaker on consumer protection and consumer fraud issues, and has published numerous articles on those and other litigation issues.

Brennan is a member of the State Bar of California, the Los Angeles County Bar Association, the Hollywood Bar Association, the San Fernando Valley Bar Association, the Irish-American Bar Association, the California Association of Consumer Attorneys, the Consumer Attorney’s Association of Los Angeles, and the National Association of Consumer Advocates, for which he was a founding member.

Gerri Detweiler is a nationally recognized credit expert who has been interviewed about credit and debt by many national as well as local media. Most recently she appeared on CNN’s Issue #1 and CNBC’s On the Money.

Mary Reed is a personal finance writer who has co-authored or ghostwritten 21 books on consumer money matters. She has also written articles on the subject for national magazines.

# # #