NY Judges Slamming Debt Collectors

Eltman, Eltman & Cooper was one of 35 law firms sued last July by the state, which claimed that they had improperly obtained more than 100,000 judgments in consumer-debt cases. Editor’s notes: The dubious “enforcement” of mortgages, notes and “obligations (that have been paid many times over through credit enhancement) is both mirrored and amplified in the debt collection industry. Servicers are merely debt collectors since they are collecting for a third party. In an investigative report coming soon to these pages you will see that servicers are actually the “real trustee” for the investors, separate and apart from the Special Purpose Vehicle. But that is for later.

For now, before you slide into grief and shame over your financial condition, know this: the people hounding you for money are doing so in most cases illegally and Judges are reversing themselves across the country as they take a closer look at the the procedural tricks routinely employed by those who prey upon consumers with “debt” claims have that long since been extinguished, written off, repackaged into resecuritized asset backed securities, with even more credit swaps on top of the old ones.

In this article from the New York Times, the clarity of the scam is being revealed and unraveled. The ultimate conclusion of this mess will take years if not decades, to move us back to a state of equilibrium. In the meantime, the major piece of advice you will probably get from any consumer law advocate or attorney is this: don’t pay anyone unless you are sure you owe THEM the money. The question is not whether you owe money (i.e., the existence of the obligation), the question is the identity of the creditor and whether the obligation, without your knowledge was already paid in whole or in part by credit default swaps, other credit enhancement techniques, etc.

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May 7, 2010

In New York, Some Judges Are Now Skeptical About Debt Collectors’ Claims

By WILLIAM GLABERSON

As New Yorkers have tumbled into credit card debt in large numbers during the great recession, bill collectors have inundated the courts to get what they say is due. In turn, the courts have issued hundreds of thousands of orders against residents. Some consumer groups argue that by doing so, the courts have become little more than an arm of the debt collection industry.

Now, a few judges in New York State are suggesting that they agree, at least in part, with the consumer groups. They have fumed at debt collectors and their lawyers, scolding them for interest as high as 30 percent a year and berating them for false statements and abusive practices.

Some of the rulings have even been sarcastic or incredulous. In December, a Staten Island judge said debt collectors seemed to think their lawsuits were taking place in a legal Land of Oz, where everyone was supposed to follow anticonsumer rules invented by some unseen debt-collection wizard.

Last month, a Manhattan appeals court threw out a credit card case, saying a debt collection company had sued the wrong person but pursued the case anyway.

“I think these judges are outraged at the status quo, and they’re trying to change it,” said Janet Ray Kalson, a Manhattan lawyer who is the chairwoman of a City Bar Association committee that has studied the deluge of credit card cases.

Debt-buyer businesses purchase debts — along with lists of names and amounts supposedly due — for pennies on the dollar from credit card companies and sometimes have no real evidence about whom they are suing or why. They then file tens of thousands of suits, often with little to back up their claims.

A Nassau County District Court judge said recently, for example, that one of New York City’s high-volume debt collection law firms, which has close ties to a debt-buying company, did not provide “a scintilla of evidence” that there was even a debt in a case against a Long Island woman.

The suit received an unusual amount of attention. The judge, Michael A. Ciaffa, said that it “regrettably, involves a veritable ‘perfect storm’ of mistakes, errors, misdeeds and improper litigation practices.” Judge Ciaffa said the law firm, Eltman, Eltman & Cooper, ignored court orders, made a “demonstrably false” assertion and harassed the woman for payment even after its suit was dismissed.

The case before Judge Ciaffa ended with an order that is far from typical in a credit card suit. The woman who had been sued, Patricia Bohnet, a bookkeeper and single mother, did not have to pay anything. But Eltman, Eltman & Cooper had to pay $14,800 in sanctions for violating ethical rules at least 18 times. Under the judge’s order, $4,800 is to go to Ms. Bohnet and the remainder to a state fund that works to reimburse clients for dishonest conduct by lawyers.

“They don’t care if you’re sick; they don’t care if you’re poor,” Ms. Bohnet said in an interview at her job in Woodmere. “Their only job is to collect money, and they’ll do it in any way possible.”

In response to questions, the law firm said in a written statement that Judge Ciaffa had not had all the facts but that the firm would not appeal. “As with any firm or business that handles this type of volume,” it added, “there exists a potential for errors or omissions in the normal course of business.”

Eltman, Eltman & Cooper was one of 35 law firms sued last July by the state, which claimed that they had improperly obtained more than 100,000 judgments in consumer-debt cases. Separate files in Federal District Court in Brooklyn show that without admitting fault, the Eltman law firm settled a class-action suit in 2006 that claimed it used “false, misleading and deceptive means” to collect debts.

Privately, some judges say they are embarrassed that in many New York courts, debt-collection lawyers have grown so comfortable that they give the impression they are in charge of the proceedings and do not need prove their claims with strong evidence.

In the recent pro-consumer rulings, skepticism of the debt collectors’ claims has been obvious. A Civil Court judge in Brooklyn, Noach Dear, has written decisions that come close to saying that the collection cases are sometimes based on falsehoods.

In a case in August, Judge Dear observed that there was nothing to substantiate a lawyer’s claim that she somehow remembered mailing a document to the credit card holder that was the foundation of the collection suit. The document, Judge Dear noted archly, had been mailed three and a half years earlier.

Behind the legalese of the credit card suits, some judges have suggested, there is often a disorganized jumble of documentation. A Mount Vernon City Court judge noted that one case was based on little more than “a self-serving computer printout.” A Manhattan judge said one company that bought debt claims from credit card companies had filed suit against a cardholder although it did not own that particular debt.

In the Staten Island case, the judge, Philip S. Straniere, said a credit card company was claiming interest of 28 percent on the balance due, which would be illegal as usury under New York law. The company argued that the credit card issued to a New Yorker that seemed to be from a national company had actually been issued by a one-branch bank in Utah, which had no usury law.

“Like the Land of Oz, run by a Wizard who no one has ever seen,” Judge Straniere wrote, “the Land of Credit Cards permits consumers to be bound by agreements they never sign, agreements they may never have received, subject to change without notice and the laws of a state other than those existing where they reside.”

The judge ruled that the supposed agreement allowing unlimited interest charges was not enforceable in New York.

Industry officials said that tales of abusive collection cases were misleading. “There are certainly colorful stories,” said Joann Needleman, an officer of the National Association of Retail Collection Attorneys. “People think that handful is the rule, not the exception, but it’s not.”

But Ms. Bohnet, the Long Island woman who was sued by a New York law firm, said just one case could be harrowing. When she received a call last year at the charity where she keeps the books for $39,000 a year, the voice on the other end told her the debt collectors had a five-year-old court judgment against her for a $4,861 debt. She had to pay, or they would start taking money out of her salary, she said she was told.

The address of the debt-collection firm and its lawyers at Eltman, Eltman & Cooper seemed to be the same, she noticed.

Ms. Bohnet did not know she had ever been sued. She started to cry, she said, worried that with a chunk of money taken every month, she might lose the modest apartment she needed to share custody of her teenage daughter.

“I was in all-out fear,” she said, adding, “After I got off the phone, I realized I didn’t even know what the debt was for.” She might have had an old credit card debt, but she had had some years of problems with alcohol and drugs and tangled financial problems. In recovery, she said, she had worked to clean up her financial affairs.

The next time the collectors called, she said, she told them that she was willing to pay if she owed any money but that she needed to see some proof that they had the right person. Then, without a lawyer, she went to the court, in Hempstead, to check into the order the debt collectors said they had against her.

After some digging, she found the case. The debt-buyer’s lawyers had filed a sworn statement that they said was proof she had been given notice of the suit. A process server for Eltman, Eltman & Cooper claimed she had been given a copy of the suit personally on July 30, 2004.

Judge Ciaffa doubted that. Ms. Bohnet, he wrote, “hadn’t lived at that address since 1998.”

21 Responses

  1. This Judge Noach Dear from N.Y. before you make this most corrupt judge that stays on the take look good with his little credit card scam give back to his people only has a large number of foreclosure cases before him that people are losing there home in large numbers because this bribe taking cut throat signs the judgements to sell your house after his has gotten is pay. This judge never was a practice law and the n.y. bar disqualified him the become a judge, he knows nothing about foreclosure and he is an acting supreme court judge. So please do not bill this piece of SH-T! up to look good cause he is a crook and the courts allow him to get away with it.

  2. Isn’t it about time to learned to make Debt Collectors pay you to go away, instead of the other way around?

  3. Bruce

    Capital One is not the current creditor. The accounts were securitized and defaults removed from trusts and sold/swapped to third party debt buyers/swap holders. This is the practice. Any creditor must account for recovery on balance sheet and to IRS. That is the problem – no servicer, including Capital One Bank, NA, Capital One Services, etc. accounts for anything. This is land of default swaps/derivatives – land of no one knows who really collects the debt recovery. (If Capital One collected they would have to do a reverse accounting entry for charge-off to the IRS for their recovery – this is never done).

    That is the way it is. And, this carried over to mortgage loan securitization in the same way. And, credit card debt was promoted to promote subprime mortgages.

    Anyone who comes near to exposing in court winds up with a settlement – i.e. not precedent setting case law. Need clever attorneys to expose the fraud and carry through with judge that is astute. For those attorneys class action is the way to go – but please leave some reward for the people.

  4. I am an attorney. I represent people being sued by third parties every day. I would love to learn how to defend a First party suit such as one brought by Capital One.

  5. Oh, and there are statute of limitations for how long someone can try to collect a dept on you, # of years. Which are different for every state, most are 4 years though. That time frame starts, from the very day your account started to miss payments, before they closed it. So by the time they close the account and charge it off, probably 6 months to a year have gone by and your already part of the way done dealing with this.

    Now this doesn’t mean the collection agency can’t sell the dept to another company, they will, and about a year later from the first attempt you will probably hear from someone new. But this is utterly pointless on their part. Becuase if the first people couldn’t prove ownership, then the next people can’t, and are just as screwed as the first collection agency.

    So, all you do is send another letter, same as before, but with the new agency information, and walla, your clear again for another year or so!

    Now, once you hit the Statute of Limitations, or SOL, funny huh, they can never collect again, ever, any agency, or bank; nobody, at that point the dept is completely null and void (as if it wasn’t already).

    After that point, you simply send a letter, to anyone trying to collect at that point, and saying the SOL have expired for that dept, and they have no legal right what so ever to collect, and they need to exponge that dept from their records.

    By the way, the SOL are for the state you live in, when the dept was created, not the banks address state, don’t let them pull that on you either.

    For some reason, to fight this stuff, the laws are very explicite and clear. 🙂

    Rich

  6. Anyone wishing to fight the credit card companies on your own, on this sold off dept, i have personal experience with this, with chase bank. they charged off my card, because i refused to pay them, for their improper balance transactions and then harrassing phone calls. They then sold the rights to the debt collection, which start the day the account went into default, not the day they charged it off. This website, although i didn’t buy the book, the extra links get you around that, made everything a lot easier to understand, and fully worked for me. Sent a letter to the “lawyer” agency, and haven’t heard from them since!

    I modified the sample letters into, one nice all encompanssing one. Since they never responded to me, they have thus waived any and all rights to collect now, and if they post anything on my credit report, and don’t remove it when i ask them too, i can sue for upwards of $5000. It’s a guaranteed win for me, they either respond with proper paperwork, and can collect, or they don’t and can’t make a bad remark on my credit report, if they do, and i already asked them to prove it and the refused to acknowledge me in any way, then they loose, hands down.

    Hope they helps everyone!

    Rich

    Ok, it’s not letting post links i think so if anyone wants them, email me at santora@yuba.com

  7. Need some help fighting the NY FORECLOSURE MILL STEVEN J BAUM

    Looking for any cases or pleadings regarding SANCTIONS against this firm.

    I have read Judges threatening SANCTIONS for representing more than one party and ther client not having the note and mortgage at the time of filing the foreclosure suit. Can’t seem to find any actual SANCTIONS.

    Any help would be appreciated.,

    Thank You

  8. Anonymous:

    would like to talk to you. khenry51@hotmail.com

  9. Lisa:

    This is from many conversations with the SEC. All tied to securitization which I have discussed many times here. Securitization is the removable of CURRENT receivables from corporate balance sheets to off-balance sheet conduit. Subsidiary servicer services the trust. Once an account is in default – no pass-through security can be backed by the default. Thus, defaults are subordinated to the bottom tranche and removed “swapped out” of the trust to default tranche owner/swap holder. The swap holder is a credit enhancer to the trust. They are paid a premium to insure that the charged off debt will be purchased (usually for pennies on dollar) and with collection rights swapped out of the trust. Servicer no longer services for charged-off and removed collection rights from trust. But they will try to claim that they do. Servicer is NOT the creditor – this is well accepted now. Need to find out the CURRENT creditor to whom the debt is owed. Servicer does not account on financial statements for recovery of anything because they do not have financial statements. Thus, the parent corporation would be the creditor – but parent corp. has long disposed of collection rights by charge-off.

    The OCC will also confirm the process – but you have to be careful with wording. Accounts cannot be sold because the account is gone by the charge-off. Only collection rights to the debt are sold. This is common practice.

    Kevin

    Anything with a “NA” in it is likely a servicer. Check out Capital One’s Trusts for securitized credit card debt. If your account

    I can just about guarantee you that Capital One does not own the right to collect your debt, and that the attorney does not likely represent Capital One. . Yes, original creditor can retain collection rights after debt is charged off – but they rarely do – and, believe me – after a year the debt rights are long gone from Capital One. Collection rights are, most often, sold to a third party debt buyer – or Capital One Bank (NA) is representing the swap holder (which is a debt buyer) to the Trust from which your account was charged off and collection debt rights “swapped” out. Charged-off debt can be collected – but only in the name of the right party and CURRENT creditor!!.

    Carefully check your credit reports including all details and fields and who is reporting. If you post your email – I will contact you.

    I am not an attorney and this is not meant to be construed as legal advise but only for educational purposes.

  10. Anonymous:

    Thanks for the input. Here’s the nuts and bolts of the case. The Plaintiff is CAPITAL ONE BANK, N.A.
    The complaint starts out; Comes now the Plaintiff, by and through counsel, XXXXX XXXXX, P.C and herewith alleges etc, etc, etc. And when I asked the attorney flat out “did you have this debt assigned to you, did you purchase it or do you represent the Plaintiff as their attorney?” He said he represents Capital One as their attorney. I had heard somewhere that even if a debt is charged off, the original creditor could still sue for collection and/or sell the debt off. It shows on my credit report that the debt was charged off a year or so ago. The trial date is set for mid July and I need to know if this is all smoke and mirrors or do they have a cause of action with a charged off debt?

    Thanks, kevin

  11. ANONYMOUS-

    RE: Charged off debt / Account extinguished.
    You say “This is straight from the SEC”. Where can I find that information? Is it publicly available?

  12. edgetraderplus:

    Because when an account is charged-off by the bank, the account is extinguished – gone – done- finished. No bank can sell a charged-off account (Holder in Due Course law). The account no longer exists – no contract – no account. All that remains is collections rights to the DEBT. This also follows through with securitized loans – receivables removed from corporate balance sheet to off-balance sheet conduit.

    Structured finance is simply burying of debt into off-balance sheet conduits which hide corporate ownership and hide details of the loans removed from corporate balance sheets.

    When loan are securitized – once they are in default they are charged-off the collection rights are “swapped” out of the trust to a default debt buyer/hedge fund. Servicer operates on the the swap holder (debt buyer) behalf.

    This is straight from the SEC – and OCC if you pressure. Default accounts are finished – gone – done. Only collection rights remain. And, while the original bank MAY retain collection rights – they do not – it is not profitable for them to do so. They sell (swap) collection rights in bulk.

    You have to pressure courts for discovery. Believe me, they will then settle if you get discovery.

  13. Because we are talking about fraud… I know that there is a big one going on with the fact that the FDIC is giving all the banks they sized to US BANK (the N.1 plaintiff in foreclosure cases across the country).

    Now I found this article on how Geither gives a bank 50 M in tax credits in the morning and the same bank is sized at night and guess who gets it ??? US BANK !

    http://www.americanbanker.com/usb_issues/120_5/should-fbop-have-been-saved-1018033-1.html?zkPrintable=true

  14. Monday 10 May 2010

    ANONYMOUS:

    Why can’t accounts be sold, if you do not mind?

  15. Kevin

    Capital One is no longer your creditor. Accounts are charged off and sold to debt buyers. Most likely “Capital One Services” is claiming to be creditor – but they are not. This is all same as servicer fraud in foreclosure actions. Servicers are just acting for third party debt collector. Credit card loans are securitized too, and when they are charged off they are “swapped” out and collection rights only (account cannot be sold) sold to third party.

    Do not pay – you would not be paying the real party and never have your credit fixed.

  16. Can anyone tell me what actually happens when a credit card company “charges off” a debt? Can they still hire a lawyer to collect for them? The full amount? If they charge off, don’t they use the amount as a business loss for tax purposes? Wouldn’t that reduce the amount. Etc, Etc, Etc. I’ve got a law firm claiming to represent Capital One suing me for over $5K on a card with a credit limit og $3K.

  17. One day, 300 million Americans are going to get a clue. They are going to figure out that this has been all a huge scam. And this scam has been enabled by our own Government.

    A Ponzi scheme is defined as an operation that returns money to investors from subsequent investors by enticing them to participate by offering returns other investments can not guarantee. Sound familiar? It should. The Ponzi scheme is guaranteed to collapse because it requires ever greater number of investors to pay for the ones at the top. Get it? Guess where WE are in all this.

    Thus, when you stop participating in this sucker’s game it collapses. Well, that’s what happened in the mortgage meltdown. Investors finally figured out they were in a suckers game and they pulled out. No money to fund new loans and BAM! The whole house of cards came down. The government bailed out those at the top of this sucker’s game with our tax money to keep the game going. Only it didn’t work out that way. Instead the big banks took the money and paid themselves leaving the rest of us to pay on what I consider unenforceable contracts. The banks now use a bunch of wise guys…those thugs MERS and the Servicers to collect more and more money or confiscate property.

    So, it’s no different with the whole credit card scam. It’s the same sucker’s game. They just keep reselling the “debt” to an ever widening pool of thugs. And that’s all those debt collectors have become…thugs. Wise guys. You stop participating when you stop paying. You resist when you use the courts, the law and anything else you can do.

    Consider yourself, all you who are fighting foreclosure and blowing off the credit card companies, as Freedom Fighters. We are The Resistance. This is a Debtor’s Revolt. A slave rebellion.

    I’ve read that there is more debt in the whole world than there is money available to pay it. What’s up with that? It’s called “interest”. And it compounds.

    The IMF has carefully considered and factored into their scheme that civil unrest will occur. The objective is to impose austerity measures by cutting all services. You end up paying higher and higher taxes for less and less benefits, if any. It all goes to servicing the debt. There is no money to buy necessities because there is no money to manufacture those necessities. When the unrest escalates, military intervention is used to quell the violence. As a natural outcome, a fascist government is imposed to keep order. Therein lies how the take over occurs and an aristocracy develops with an underclass to service them.

    When this happened in Argentina in the 90’s, all hell broke lose. You can read the stories on line. Argentina finally got out of their mess when, I believe, the president of Argentina went to the Chavez in Venezula to get the money to get rid of the IMF. At least that’s the story I’ve heard. In Iceland, the people voted a resounding NO to bailing out any private banks. The people of Greece are rioting…and it’s going according to IMF plan. We’ll have to wait and see how that turns out. But you can see how the Greece crisis is causing the EU a huge problem. Well, just imagine the US in the same situation. And our government is in debt up to it’s ears. The IMF is just waiting in the wings.

    The only solution is resistance. Do the best you can but you must resist.

  18. I now believe that credit is overrated.

    It is easy to believe this when one’s credit is shot thanks to not paying a mortgage for two years as well as not paying userous credit cards.

    I am cash only, obviously, and it has been just fine. All other bills are paid, but anybody having anything to do with securitization of credit as it involved me, has been forgotten. Of course, we all know the original parties have been paid in full, so I sleep rather well.

    At the end of the day, we taxpayers will have to pay off the $2 trillion in deficits that this whole mess has created. Thus, it is patently unfair to also require us to pay off the credit that was extended in the first place, to which has been paid off already by swaps and default insurance products. It is like forcing us to pay for the credit twice.

  19. ATTENTION:

    I TALKED TO DEUTSCHE BANK NATIONAL TRUST COMPANY AS TRUSTEE.
    THEY CLEARLY TRACK PROPERTIES BY ADDRESS

    THE SERVICER USES LOAN NUMBERS.

    THIS CAN EXPLAIN HOW THE SAME LOAN NUMBERS MAY BE UNDER TWO DIFFERENT TRUSTEES AND NO ONE WOULD KNOW THE DIFFERENCE. THIS IS THE TRUE MECHANISM IT COULD DONE.

    I HAD A LONG DISCUSSION WITH DBNTC THE TRUSTEE DEMANDING THE LOCATION OF THE MORTGAGE FILE.
    IT WAS CLEAR THAT THERE ARE TWO TRACKING SYSTEMS.

  20. Willow

    I use to think I must pay…But not any more. My entire neighborhood is a forclosure. Homes are auctioned off for 1/2 of the amount of what we paid 6 years ago…
    I refuse to pay for some one else’s crime.and refuse to pay for something that does not exist. I will fight before I walk away… These are the days of selling debt by way of every one elses money…

    The hell with the bastards….

    BSE

  21. I stopped paying these credit card bastards ages ago. They call. I don’t answer. I’ve got caller ID. They write letters. I don’t respond. I keep a file on all of them and who they claim they represent. You should see how many times it’s changed hands. I’m sure the junk debt folks will be next. They are the one’s who can’t tell you who they represent.

    Am I a deadbeat? Nah. I pay my water, electric, gas, insurance and other bills right on time and in full. I just don’t cotton to paying 30% interest. All of it has been written off and sold. So, all the original creditors have been paid. The rest are just vultures. Is my credit destroyed? Yep. But I don’t care because there’s no credit in the system anyway. Do I pay my taxes? Yep. Sure do. I operate on cash only.

    Will they sue? Maybe. Litigation is expensive and the junk dealers don’t want to waste resources on a gamble. I’ve just turned the tables on them. If you are loosing you house to foreclosure why are you paying on credit card debt? Your credit is already destroyed. You can use that money for necessities.

    At some point you just have to resist. This is how I resist. As the French say…J’accuse! J’accuse them of treason, of usury, of fraud and deceit, of Ponzi schemes, of bribery and blackmail, of abuse and torture, murder and mayhem, of orchestrating civil unrest (because it’s gonna come to that), of robbery and theft, of undermining the rule of law and the fair administration of justice…the list goes on. J’accuse! J’accuse! J’accuse!

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