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AZ Collections Moore Law Group - but judgement proof?


scarab
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I learned recently that a close family member has racked up some debt, and defaulted.  As this person has no one else, they have asked me to help.  To preserve anonymity, I will refer to this person as M.

 

Here's the situation:

M is well into retirement age, and has not worked for many years.  They rely 100% on Social Security Income (this fact is significant, and I will come back to this) at well below $16,000 per year income.  No other income.  I occasionally buy stuff M needs and have it shipped to their door step.  M does not own a car, home or have any assets of significant value, as they cannot afford any of this.  They rent the place they live.  Additionally, M speaks English as a 2nd language and does not always understand what you are telling them, but (due to culture) will agree that they understand even if they don't.  They live in Arizona, Pima County (I'm in another state).

Unbeknownst to me, around 3-5 years ago, M started racking up some pretty serious debt, to the tune of around $40,000 or possibly more.  This was not all at once.  It took a few years to get to this level, and this is with several creditors.  I don't think M really understood what he/she was doing because at the peak, they were using cash advances from one credit card to pay other credit cards and did not really understand that this did not pay down debt.  When I discovered all of this, I had to explain all of this to them, as if they were a child.

The largest creditor is Bank of America and this person racked up around 33K with them alone.  This was in the form of credit card debt.  They kept pushing "cash advance checks" to M and M, not knowing any better (possibly getting senile), went ahead and signed and deposited the "checks" into their BofA checking account and spent the money.

Once I found out how bad the situation was, I spoke with a consumer protection law firm.  While M cannot afford an attorney, I can.  Basically our attorney said the following: 

1) They can only help once M is sued and/or if any creditors have violated M's rights under the FDCPA or FRCA.  They reviewed all of the demand letters received so far and did not find any issues.  There were no phone calls, as M changed their number.  

2) The attorney's assessment is that M is judgement proof: the BofA lawyers can sue and even get a judgement, but they cannot legally enforce it by garnishing money from M's bank account, as long as the money in that account came from Social Security (and no other sources - do not co-mingle funds, etc.).   No problems or complications there.

3) If BofA sues and gets a judgement, and serves a garnishment notice (not sure of the terminology here) on M's current bank in an attempt to grab some funds, we can tell M's current bank that all of the funds in M's account are exempt from this judgement as all funds came from Social Security (this is 100% true), and that M only receives income from SS, so its also exempt.

4) Doing nothing may be the best course of action if BofA sues M, due to M being judgement proof.  I'm strongly considering this course of action for M.

5) Our lawyer also said that BofA would be reluctant to sue an elderly person, though I understand that means that they still might.

BofA is aware that we have spoken to a consumer lawyer as we asked our attorney to respond to BofA's early demand letters (before they hired their own lawyers).  I believe this is why they hired this firm instead of a normal CA, as we have raised BofA's guard.  BofA hired the Moore Law Group (licensed in AZ and a few other southwest states) and they have recently sent a demand letter for around $14K on behalf of BofA.     Its the usual demand letter and states we have 30 days to dispute the validity of the debt, etc.

Note that M used to bank with BofA, so they are well aware that they made large loans to an elderly retired person who had only a very meager Social Security as their only income, and they knew M did not have the means to pay all of that money back.  If we had to fight BofA in court, arbitration or sue them for FDCPA violations, we would use that against them. While this is not a legal argument: I'm saying that we could easily paint a picture of BofA as a predatory lender of elderly immigrants that do not speak/understand english very well.  The date of the last payment made to BofA by M was around the middle of 2016 (not sure of the exact date), so I think they are within SOL (note that they have not yet sued M).

M did not have the original BofA credit card agreement, so I am uncertain if arbitration is available.  Attached are the agreements I could find online that I believe are applicable.

My questions are: 

Should we bother with DV?  They already stated in their letter that if M sends a DV letter, they will obtain verification and send it to M, etc.  Note that BofA still owns the debt.  They did not sell it to a JDB.  To me, the DV letter seems like a waste of time.

Should we send a letter to the Moore Group explaining M's situation to them (elderly, SS income and bank funds from SS are exempt from judgements, garnishments, etc.)?  I was thinking of letting them know that we would be on the lookout for any garnishments hitting M's current bank account (with another bank, where M gets Social Security deposited), and that we would sue if they did garnish anything.  I believe this would be a FDCPA violation, though I'm not certain on this last point.  Also, if they attempt a garnishment, but we manage to stop it by notifying M's bank all money is exempt, do we still have a FDCPA violation?

My goal in sending a letter stating this is to get them to understand that suing M would be a waste of their time and money.  If BofA or the Moore Law group has done any background checks on M, they would see that M does not have any assets, or a job, and therefore is very unlikely to pay them.

 

 

 

2008 - BofA-Agreement.pdf

2003 - Bank-of-America-Agreement-with-JAMS.pdf

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Few things- good details here. Makes it easier to respond and provide specific guidance. Original Creditors aren’t subject to FDCPA so you won’t have any FDCPA violations against them per se.  “M’s” account was placed with Moore Law Group to collect and ultimately sue, that is a guarantee. Where you may have some luck is sending that letter you mention. If you send it coming from you, make sure you include a signed POA or something stating you can discuss account.  Otherwise writing a detailed letter with proof ie ssi eligibility letter, if she’s filed taxes show low income. Essentially show them every reason not to sue since it won’t result in any collection. Sometimes that’s good enough for them.  

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The attorney is covered by the FDCPA so I would at least DV them. They will probably reply back but at least that buys some time.

You can also try to send a letter explaining that trying to get a judgement is a waste of their time but don't be surprised if they do not care. Most feel that they can get the judgement anyways because the person may come into some non-exempt resources (say win the lottery). If they do take it to court, I would send a CMRRR letter to the bank informing them that the bank account contains only exempt funds from levy and that the bank is on notice should they try to levy any funds from the bank account. That will usually stop that.

This is a case where the bank screwed up royally (flashbacks to the pre housing market meltdown when anything with a pulse could get a credit card) by issuing this person the card and now they will have to eat that. Make sure you are ready for the calls after this person dies because they will try to collect from you as a friend trying to clear another friends good name (yeah right).

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Thank you for the responses.

That's a good idea about sending a pre-emptive letter (CMRR) to M's current bank to inform them of M's exemption.  I will do that.

I'm not worried about them calling me if M dies, and I end up being executor.  I know I don't owe them anything.

Today, I sat down to write a DV letter, to send to M, and have M sign it and send it on to the Moore Law Group, and the same time, I was going to have M sign a POA and send that back to me.  As I was researching these items, I came across an article about the SOL for credit card debt in AZ:

http://skibalaw.com/arizona-statute-of-limitations-on-credit-card-debt-new-decision-deals-blow-to-consumers/

Thankfully for Consumers, the AZ Supreme Court vacated the AZ court of Appeals ruling. (see attached or see: https://www.azcourts.gov/Portals/0/OpinionFiles/Supreme/2018/CV-17-0109-PR Opinion.pdf )

CV-17-0109-PR Opinion.pdf

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6 hours ago, Harry Seaward said:

It's the bank's fault someone bought stuff they couldn't afford? 

It is the bank's fault for offering someone with $16K/year in income from a source they cannot touch a credit card with a $33K limit. I still believe that the debtor needs to take some responsibility but so does the creditor when they mess up too as in this case. This is reminiscent of the days when banks issued cards to toddlers, pets, and even dead people. It might not be the banks fault that this person bought stuff they could not afford but it is their fault for giving them the opportunity to begin with.

An example might be in Minnesota, the courts issue what we call Whiskey Plates for those who own vehicles and have been convicted of a major DWI incident. Included in this are vehicle owners who loan their vehicle to someone who they know to not have a license due to DWI or know to be drunk. In other words, the vehicle owner has to take some responsibility too.

So yes, this is at least partially the bank's fault. They should have checked things out before offering credit to this person.

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They are going to call you anyways if they find out your name is attached to M in any way (they find out using stuff like LexusNexus). The thing is, M estate stands for his debts. If M is insolvent, the debts do not get paid. You do not owe the debt and you need to have the backbone to say that because they will either insist that you do as executor (you don't) or they will turn on the charm and say this is what M wanted (it probably is not).

Beyond that, if they sue M, you can try to fight it. Even with arbitration though, for $33K, I think BOA will follow M into arbitration so that might backfire. Just make sure that M's bank knows his income is from exempt sources. Beyond that, make sure M fills out the financial depositions every time they are sent. I doubt the bank will get the hint that the judgement is printed on fine legal outhouse paper because everything is computerized now and computers, unlike humans, do not get the hint.

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25 minutes ago, WhoCares1000 said:

It is the bank's fault for offering someone with $16K/year in income from a source they cannot touch a credit card with a $33K limit. I still believe that the debtor needs to take some responsibility but so does the creditor when they mess up too as in this case. This is reminiscent of the days when banks issued cards to toddlers, pets, and even dead people. It might not be the banks fault that this person bought stuff they could not afford but it is their fault for giving them the opportunity to begin with.

An example might be in Minnesota, the courts issue what we call Whiskey Plates for those who own vehicles and have been convicted of a major DWI incident. Included in this are vehicle owners who loan their vehicle to someone who they know to not have a license due to DWI or know to be drunk. In other words, the vehicle owner has to take some responsibility too.

So yes, this is at least partially the bank's fault. They should have checked things out before offering credit to this person.

Not to stir things up, but I highly doubt bofa saw on “m’s” application that she makes $16k a year and said hey this would be a great person to extend $30k credit line too. Is her credit line $30k or did a bunch of payments bounce after she made payments resulting in balance due if that amount. Do you know what income assets and etc she told the bank?  There definitely seems to be way more to this story then being told. That being said, I wish you luck. 

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3 hours ago, Debtguy393939 said:

Not to stir things up, but I highly doubt bofa saw on “m’s” application that she makes $16k a year and said hey this would be a great person to extend $30k credit line too. Is her credit line $30k or did a bunch of payments bounce after she made payments resulting in balance due if that amount. Do you know what income assets and etc she told the bank?  There definitely seems to be way more to this story then being told. That being said, I wish you luck. 

This is exactly what happened.  There is nothing more to the story.  If you want more detail: there are 3 credit card accounts.  M received cash advances on all 3.  By using cash advances to make payments to one account, (not pay it off, just make payments) and getting cash advances from that account to pay another, repeat ad nauseam, the bank saw fit to increase all 3 lines of credit, to the point where the total available credit was close to $40k.  By the time M defaulted, M had racked up around $38K.

All 3 were through the bank.  It's the same bank M had their checking account through and receive Social Security benefits into.  The bank was well aware (or should have been) of M's income source.  M had been banking with them for YEARS.  I don't know what M told them as far as assets are concerned.  M is not in a habit of lying or exaggerating.  M has not owned any assets of any consequence for years, not even a car.

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4 hours ago, WhoCares1000 said:

They are going to call you anyways if they find out your name is attached to M in any way (they find out using stuff like LexusNexus). The thing is, M estate stands for his debts. If M is insolvent, the debts do not get paid. You do not owe the debt and you need to have the backbone to say that because they will either insist that you do as executor (you don't) or they will turn on the charm and say this is what M wanted (it probably is not).

Beyond that, if they sue M, you can try to fight it. Even with arbitration though, for $33K, I think BOA will follow M into arbitration so that might backfire. Just make sure that M's bank knows his income is from exempt sources. Beyond that, make sure M fills out the financial depositions every time they are sent. I doubt the bank will get the hint that the judgement is printed on fine legal outhouse paper because everything is computerized now and computers, unlike humans, do not get the hint.

Right now, they have only demanded on one of the 3 lines of credit, and not the other 2.  I have no idea why they haven't demanded on the other 2 accounts, but this one was the largest.  So, they are demanding under $15K.   Are they likely keep going in arbitration on that?

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4 hours ago, WhoCares1000 said:

It is the bank's fault for offering someone with $16K/year in income from a source they cannot touch a credit card with a $33K limit. I still believe that the debtor needs to take some responsibility but so does the creditor when they mess up too as in this case. This is reminiscent of the days when banks issued cards to toddlers, pets, and even dead people. It might not be the banks fault that this person bought stuff they could not afford but it is their fault for giving them the opportunity to begin with.

An example might be in Minnesota, the courts issue what we call Whiskey Plates for those who own vehicles and have been convicted of a major DWI incident. Included in this are vehicle owners who loan their vehicle to someone who they know to not have a license due to DWI or know to be drunk. In other words, the vehicle owner has to take some responsibility too.

So yes, this is at least partially the bank's fault. They should have checked things out before offering credit to this person.

I agree, but practically speaking, M cannot pay the bank.  SS is M's only income and M is near (or under) the poverty line as it is.  M's SS income is exempt under law anyway.

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2 minutes ago, scarab said:

Sometime about the middle of 2016.

The account should have been charged off no later than 6 months after that default in the event it was never brought back to a current status.

I still doubt the account had a $33,000 limit.   Account holders who go over their limits will be charged over-the-limit fees.

You need to read the terms of the agreement.  It should provide information on the rate of interest and whether or not the bank will raise the interest rate when an account goes into default. 

Monthly late fees, over-the-limit fees and interest can cause an unbelievable increase in a balance.  It might be a good idea to take the information to a consumer attorney just to let him/her look it over to see if he can spot any discrepancies or possible violations of federal or NV laws.

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1 hour ago, scarab said:

Right now, they have only demanded on one of the 3 lines of credit, and not the other 2.  I have no idea why they haven't demanded on the other 2 accounts, but this one was the largest.  So, they are demanding under $15K.   Are they likely keep going in arbitration on that?

They might go to arbitration for that amount, it is hard to say. I would first make sure that arbitration is in the contract. If not, then that is not an option.

To answer your question, I do not expect M to pay on these account. Unfortunately, the decision to sue M is being made by computers and those who follow what the computer says rather than actually thinking because any thinking human being would realize that suing M would be a fruitless endeavor. I have been dealing with collectors for 12+ years now in regards to another person in a similar situation as M (although in her case, she used a couple of different names which suggests some fraud). She is in section 8 housing and only has SS for her income. Just now her judgements expired (In Minnesota, the creditor has to file a new case in order to renew a judgement) but I bet I still get the calls. They will never collect from this lady either.

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I know we get jaded on this board because we see more than our fair share of fraudsters and people who refuse to pay their bills not because they don't have the resources but because they don't want to. A few names come up instantly. However, most people do not go out with the intent to defraud the bank. I would put the percentage of applicants trying to commit fraud at about 5%. Also, based on the description of M, I doubt he could have pulled off such a fraud.

That said, M will be in his own personal hell from this. The constant calls, the constant financial disclosures, and even some of the "service process" fraudsters will call him, all looking for a payday. This does not absolve the responsibility of the bank to understand the risk they were taking. Let's say that the total credit extended was only $20K (or about 1/2 of what is owed). It still would have taken M more than his lifetime to pay that off with minimum payments and the banks certainly have M's birth date, even if they did not get an accurate picture of his income. The banks have access to more data on us than we would ever think. Due diligence would have told any bank to not extend more than $500 - $1000 in credit to M. Again, banks are using computers to make these decisions and no thinking person can intercede and ask what why we are doing that.

So is M responsible for what happened, yes. Is the bank responsible for what happened, yes. The bank made a gamble and although it does not happen too often, the house lost this time.

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3 hours ago, BV80 said:

The account should have been charged off no later than 6 months after that default in the event it was never brought back to a current status.

I still doubt the account had a $33,000 limit.   Account holders who go over their limits will be charged over-the-limit fees.

You need to read the terms of the agreement.  It should provide information on the rate of interest and whether or not the bank will raise the interest rate when an account goes into default. 

Monthly late fees, over-the-limit fees and interest can cause an unbelievable increase in a balance.  It might be a good idea to take the information to a consumer attorney just to let him/her look it over to see if he can spot any discrepancies or possible violations of federal or NV laws.

I posted the only agreements I could find for Bofa credit cards in my first post.

The aggregate total available of all three credit cards was around $38 to $40k.  M was had not maxed out their credit limit at the time of default, which is why the current total is less.  Sorry I was not clear on that.

 

Also, per my first post, M is in AZ.  I am in NV, so laws for NV do not apply.

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