March 10, 2004, Deanne Loonin, NCLC, 617-542-8010, Travis Plunkett, CFA, 202-387-6121

FIRST-EVER STUDY OF CREDIT COUNSELING FINDS HIGH FEES, BAD ADVICE AND OTHER ABUSES BY NEW BREED OF "NON-PROFIT" AGENCIES

--Credit Card Company Practices Have Helped Create Counseling Crisis--
Washington D.C. - As more Americans seek assistance for serious debt problems, the National Consumer Law Center (NCLC) and Consumer Federation of America (CFA) today unveiled Credit Counseling in Crisis, a report detailing the severe threat to consumers from a new generation of credit-counseling agencies. The comprehensive study found that, unlike the previous generation of mostly creditor-funded counseling services, these new agencies often harm debtors with improper advice, deceptive practices, excessive fees and abuse of their non-profit status. An estimated nine million Americans have some contact with a consumer credit counseling agency each year.

The report also concluded that creditor practices and funding reductions have caused agencies to cut back on educational services and have led more consumers to drop out of counseling and declare bankruptcy. Another key finding was that poor oversight of credit counseling agencies by the Internal Revenue Service and the states has allowed unscrupulous counseling agencies to grow and prosper.

"The findings of this report show that the credit counseling industry has undergone an alarming transformation in the last decade," said Deanne Loonin, Staff Attorney for the NCLC. "Aggressive firms masquerading as 'non-profit organizations' are gouging consumers. Deceptive practices and outright scams are on the rise," she said. "More consumers are getting bad advice and access to fewer real counseling options. Meanwhile, most state and federal regulators appear to be asleep at the switch."

Major Problems With Credit Counseling

Not all of the new credit counseling agencies are a threat to consumers. Some are above-board and have pioneered consumer-friendly practices, such as flexible hours, electronic payments and easy access by phone and by Internet. However, as the new generation of credit counseling agencies has gained market share, consumer complaints have risen sharply. The Better Business Bureau reported in 2002 that complaints about credit counseling agencies nationwide had increased to 1,480, up from 261 in 1998. Three types of problems are adversely affecting consumers:

Deceptive and Misleading Practices. Complaints and government investigations have focused on agencies that do not make consumers' payments on time, that deceptively claim that fees are voluntary, and that do not adequately disclose fees to potential clients. The last two charges are among those cited by the State of Illinois in its lawsuit against AmeriDebt. Inc.
Excessive Costs. In an industry that rarely charged for counseling and other services a decade ago, most agencies now charge fees to set up a Debt Management Program (a debt consolidation plan known as a "DMP") and to maintain it on a monthly basis. Some agencies charge as much as a full month's consolidated payment-usually hundreds of dollars-simply to establish an account.

Abuse of Non-Profit Status. Some "non-profit" credit counseling agencies are increasingly performing like profit-making enterprises. Nearly every agency in the industry has non-profit, tax-exempt status. Nevertheless, some of these agencies function as virtual for-profit businesses, aggressively advertising and selling DMPs and a range of related services, maintaining close ties to for-profit firms, reaping high revenues and paying their executives salaries that are much higher than average for the non-profit sector. A survey of Internal Revenue Service (IRS) tax reports on non-profit organizations found numerous examples of lavish executive compensation and apparent windfall revenues. For example, American Consumer Credit Counseling reported paying its president in 2000 a salary of $462,350 plus just over $130,000 in benefits. In that same year, Cambridge Credit Counseling reported a net financial gain of about $7.3 million. In short, some agencies may be in violation of IRS rules governing eligibility for tax-exempt status. Credit counseling organizations should not qualify as non-profit corporations under IRS rules if they are organized or operated to benefit individuals associated with the corporation or if they are not operated exclusively to accomplish charitable or educational purposes.

No Options Other Than Debt Consolidation. Traditional credit counseling agencies offered a range of services, including financial and budget counseling and community education, as well as DMPs. Newer agencies, in contrast, often funnel consumers only into DMPs, even if they will not benefit. Educational options, such as debt counseling, are disappearing fast.

Creditor Practices Are at the Root of Several Key Problems

Major banks have continued cutting funding to credit counseling agencies, a trend that started in the mid-1990s. Credit card issuers historically paid agencies 15 percent of the debt they recovered from borrowers in DMPs. By 2002, however, one credit counseling trade association (the National Foundation for Credit Counseling) was reporting an average contribution of just 8 percent. More recent data collected for this report indicates that creditors often contribute less than 8 percent, but on a sliding scale, depending on the ability of individual agencies to meet a range of requirements. (See attachment A.) As available revenue has declined, most agencies have curtailed the range of services they offer and have increased the fees they charge to consumers.

Most creditors are also becoming increasingly unwilling to reduce interest rates for consumers who enter debt management programs. In the last four years, five of 13 major credit card issuers have increased the interest rate they offer to consumers in DMPs (Bank One/First USA, Discover, Chase Manhattan, Fleet and Wells Fargo). Only two creditors, Providian and Capital One, have lowered rates during the same period, which still leaves Capital One's interest rate at a very high 15.9 percent. Sears, which generally charges interest rates above 20 percent, continues to refuse to negotiate any discount. Bank of America, on the other hand, will completely eliminate interest for consumers in a DMP. Other creditors that charge relatively low rates are Chase Manhattan, at 7 percent, and Providian, at 8 percent. (See attachment B.)

The increasing refusal of creditors to offer significantly lower interest rates causes more consumers to drop out of credit counseling and to declare bankruptcy. According to a survey by VISA USA, one-third of consumers who failed to complete a DMP said they would have stayed on if creditors had further lowered interest rates or waived fees. Moreover, almost half of those who dropped off a DMP had or were going to declare bankruptcy.

"By slashing agency funding and charging credit counseling consumers interest rates that are too high, credit card companies are leaving debt-choked Americans with few options other than bankruptcy," said Travis B. Plunkett, the Legislative Director of CFA. "It is hypocritical for the credit card industry to demand that Congress give them relief by enacting the bankruptcy bill, while closing off credit counseling as an effective alternative to bankruptcy for many consumers."

Creditors have recently made some efforts to stop the trend toward low-quality, high-cost counseling "mills." For example, MBNA will not fund an agency at all unless it meets requirements related to its accreditation status, its financial practices and the amount of fees consumers are charged. However, each creditor applies different requirements to counseling agencies. This has significantly increased the administrative burdens on and costs to agencies.

Bankruptcy Bill and State Laws Could Expose Consumers to Unscrupulous Counselors

Just over 1.5 million Americans declared personal bankruptcy in 2002. Credit counseling mandates proposed in federal bankruptcy legislation (H.R. 975) - and already a part of some state laws - could increase the number of consumers who are served by disreputable credit counselors. The bankruptcy bill would require debtors to receive a credit counseling briefing before filing for personal bankruptcy and to complete a counseling course before being discharged. Although the legislation seeks to insure that agencies meet certain standards of quality, it does not authorize funds to investigate these agencies, their fees, practices or success rates. This will make it harder to prevent shady operators from getting placed on the list of approved agencies maintained by bankruptcy courts and trustees, and to ensure ongoing compliance.

Public Policy Recommendations

1. The Internal Revenue Service should aggressively enforce existing standards for non-profit credit counseling organizations. The IRS should also use its power to impose "intermediate sanctions" when agencies pay unreasonable or excessive compensation to individuals associated with them.

2. Congress and the states should enact laws that would directly address abuses by credit counseling agencies. Among other provisions, the law should:
* Prohibit false or misleading advertising and referral fees.
* Require credit counseling agencies to better inform consumers about fees, the sources of agency funding,
the unsuitability of DMPs for many consumers, and other options that consumers should consider, such as bankruptcy.
* Prohibit agencies from receiving a fee for service from a consumer until all of that person's creditors have approved a DMP.
* Give consumers three days to cancel an agreement with a credit counseling agency without obligation.
* Cap fees charged by agencies at $50 for enrollment or set-up. Allow only reasonable monthly charges.
* Require agencies to prominently disclose all financial arrangements with lenders or financial service providers.
* Provide consumers with the right to enforce the law in court.
3. Credit counseling trade associations should set strong, public "best practice standards" and provide for vigorous, independent enforcement of these standards. They should also require that all of their members publicly disclose statistics on the number of consumers who fail to complete debt management programs. Trade associations and individual agencies should work to diversify agency funding and decrease agency reliance on creditor funding. This will improve the financial stability of these agencies and decrease the potential conflicts-of-interest that currently exist.

4. Creditors should increase financial support to credit counseling agencies, especially to improve credit counseling options for consumers who are unlikely to benefit from DMPs. Creditors should also reverse the trend of reducing the concessions they offer to consumers who enter DMPs, and immediately stop funding and doing business with agencies that charge high fees, function as virtual for-profit organizations, or employ deceptive or misleading practices.

Advice for Consumers

The report advised consumers to evaluate all of their options before entering credit counseling, including developing a better spending and savings plan, negotiating individually with their creditors and-in very serious situations-declaring bankruptcy. The groups also strongly recommended that consumers shop around for a good credit counseling agency.

"It is virtually impossible to distinguish the honest, caring agencies from the rip-off artists by just looking at a TV ad or making a quick phone call," said Plunkett. "Don't just respond to television or Internet ads. Get referrals from friends or family, find out which agencies have had complaints lodged against them and look at several agencies closely before making a decision."

The report offered consumers a number of tips on how to find quality credit counseling. It also cited seven "red flags" -- reasons to reject an agency and to look elsewhere for assistance:

1. High Fees. In general, if the set-up fee for a debt management plan (also known as debt consolidation) is more than $50 and monthly fees are more than $25, look for a better deal. Similarly, if the agency is vague or reluctant to talk about specific fees, go elsewhere.
2. "Voluntary" Fees that Aren't So Voluntary. Some agencies publicly claim that their fees are voluntary, but don't pass this information on to consumers. Others will tell you that their fees are voluntary, but will put a lot of pressure on you to pay the full fee, even if you can't afford it. Ask all agencies you contact if their fees are voluntary. If the full fee is too much, do not pay the agency more than you can afford.

3. The Hard Sell. If the person at the other end of the line is reading from a script and aggressively pushing debt "savings" or the possibility of a future "consolidation" loan, hang up.

4. Employees Paid by Commission. Most credit counseling agencies are non-profit organizations that are supposed to consider your best interests when offering you counseling options. Employees that receive commissions for placing consumers in debt management plans are more likely to be focusing on their own wallets than yours.

5. They Flunk the "Twenty Minute" Test. Any agency that offers you a debt management plan in less than twenty minutes hasn't spent enough time looking at your finances. An effective counseling session, whether on the phone or in-person, takes a significant amount of time, generally thirty to ninety minutes.

6. One Size Fits All. Some agencies are like a shoe store that sells just one type of shoe. The only choice they will offer you is a debt management plan. The agency should talk to you about whether a debt management plan is appropriate for you rather than assume that it is. If the agency doesn't offer any educational options, such as classes or budget counseling, consider one that does.

7. Aggressive Ads. Many agencies that advertise treat consumers fairly. However, some are being investigated or sued for deceptive practices. Many others charge unreasonable fees or offer no real counseling. Don't just respond to television and Internet advertising, or telemarketing calls. Get referrals from friends or family, find out which agencies have been subject to complaints and talk to a number of agencies before making a decision.

National Consumer Law Center is a non-profit organization specializing in consumer issues on behalf of low-income consumers. NCLC works with thousands of legal services, government and private attorneys, as well as community groups and organizations that represent low-income and elderly individuals on consumer issues.

Consumer Federation of America (CFA) is a non-profit association of almost 300 pro-consumer groups, with a combined membership of 50 million, which was founded in 1968 to advance the consumer interest through advocacy and education.

A copy of the report can be found at: http://www.consumerfed.org/credit_counseling_report.pdf.

BANKRUPTCY ON THE RISE, CREDIT COUNSELING SCAMS INCREASE.

By TONI De IULII, News Staff Reporter, Mt Vernon News, Tuesday, January 20 07:51 AM
In 2002, 1.5 million Americans filed for bankruptcy, up from 900,000 at the beginning of the last decade. In order to try to stem the tide of rising bankruptcy numbers, reform legislation has been considered for several years. March 2004 saw the U.S. House of Representatives pass HR 975, the Bankruptcy Abuse Prevention and Consumer Protection Act, a bill championed by creditors and opposed by consumer advocacy groups.

One of the bill’s provisions is a requirement that debtors seek credit counseling with a nonprofit budget and credit counseling agency before pursuing bankruptcy. The agencies are supposed to be approved, but the question of who regulates them and how stringently is a little less clear. Consumer credit counseling is a booming business in the United States. Deluged by offers of easy credit, the average American has no idea that a $2,500 debt being charged 10 percent interest takes 17 years to pay off by making minimum monthly payments. Sooner or later, choked by debt, people realize they’re making no progress toward paying off their obligations.  That’s where the credit counseling industry comes in. Many promise everything under the sun, including erasing bad credit forever or creating a new credit identity for a debtor legally. Consumers, already desperate for some ray of hope, call up or visit the Web sites of these businesses, thinking they may have found a solution to their problems.

Instead, some will wind up falling prey to scams, while many others will simply waste time dealing with credit companies that make unclear promises. Carol Stebbins, a local bankruptcy attorney, said a sizable portion of her clients have tried to deal with consumer credit counseling companies, but with few positive results. “ I would say 30 percent of my clients have gone through and signed up with a consumer debt counseling service,” Stebbins said. “What has happened is a lot of their money goes for administrative fees and they get told that the creditors have agreed to do X, Y and Z, only to find out after six months of making those payments that their creditors haven’t agreed to that. Or sometimes a creditor will agree to take something less than the minimum payment, but what the client doesn’t understand is that they’re adding what’s not paid back into the debt.”

Consumer advocacy groups such as the Consumer Federation of America note credit counseling companies often push people into debt management plans, or arrangements to consolidate debts. Their focus on these plans, the CFA notes, leaves debtors with little or no education on how to practice better budgeting techniques. Some credit counseling agencies will make arrangements with only some of a debtor’s creditors, leaving the debtor to deal with any remaining creditors that were unwilling to work with the agency. Stebbins said some of her customers have experienced these problems, which ended up pushing them into bankruptcy anyway.

While Stebbins and the CFA both said there are many useful credit counseling agencies, consumers can have a hard time trying to find good ones. Neither state registration requirements nor Internal Revenue Service regulations for tax-exempt companies are being enforced to any effect. “ The Internal Revenue Service and state charity regulators have done little to weed out for-profits in disguise,” the CFA wrote in a 2004 report it released on credit counseling.

WE THE PEOPLE SUED FOR FRAUDULENT PRACTICES:  CBS News Correspondent Kelly Cobiella reports, Larry and Kim Thompson claim We The People did advise them on the best way to file for bankruptcy.  "It seemed so simple and now it's gotten us into this mess," says Larry Thompson. They filed while working in Alaska, even though they call a Minnesota property, home.

The Thompsons claim We The People told them they could use an Alaska state exemption to protect their Minnesota land, but that was bad legal advice.  "The trustee's looking over the paperwork and he says, 'Well, I'm going to put your land up for sale.' And I had all I could do to keep from crying," says Kim Thompson. While the company insists it never gave any advice, the Thompsons are now suing.

And We The People has faced legal action in a dozen other states. In Florida, they were ordered to stop practicing law without a license. A U.S. bankruptcy trustee in New York charges the company's "unfair and deceptive tactics" had caused "debtors to place their assets at risk."  (8/27/04)

October - 2004 - WE THE PEOPLE - PETITION PREPARER SANCTIONED FOR EXCESSIVE FEES AND PRACTICING LAW WITHOUT A LICENSE
The court required Kristin Motley, a bankruptcy petition preparer, to appear so that the court might determine whether the $214.00 total fee paid by the Debtors to Ms. Motley in each of these eleven bankruptcy cases for "document preparation services" is in excess of the value of the services rendered; to show cause why certain specified services rendered to the Debtors by Ms. Motley should not be found to constitute violations of 11 U.S.C.A. § 110, including 11 U.S.C.A. § 110(k), which prohibits a bankruptcy petition preparer from engaging in the unauthorized practice of law, and; to show cause why a fine should not be imposed against her in each case.

Ms. Motley testified that We the People of Knoxville offers the preparation services for approximately fifty other types of legal documents, including, among others, uncontested divorces, powers of attorney, name changes, wills, and trusts. Ms. Motley opened We the People of Knoxville in January 2004, and she is its only employee, although she testified that her husband occasionally assists her by answering phones. She purchased the franchise in September 2003, for $89,500.00, and she pays a monthly fee of 25% of her gross profits to We the People USA. In exchange, We the People USA provides Ms. Motley with the assistance of a supervising attorney, the assistance of a typist/processor, television advertisements, corporate support, documents for distribution, and use of the company's name. The court ordered refund of fees, plus sanctions and enjoined Ms. Motley from further similar offenses. IN RE ROSE, (E.D.Tenn. 2004)

April 13, 2004 SOURCE: NACBA LISTSERVE; Richard Hawk, Ed Boltz
“WE THE PEOPLE” SANCTIONED FOR PRACTICING LAW WITHOUT LICENSE AND OTHER OFFENSES
In August, 2002, there was a list thread regarding We The People petition preparers. Recently, Consumer Bankruptcy News, Volume 12, Issue 15, April 17, 2004, reported that in the case of In re Gilliam O. and Vanessa A. Moore, No. 02-01514-5-ATS (03/20/03), Judge Small (Bankr. E.D.N.C.) ruled that the fee of $199 charged by We The People for the preparation of a bankruptcy petition was too high for a typing service and that $80 was an appropriate fee because it would take an experienced typist, charging $40 per hour, two hours to prepare the documents using the appropriate computer software. The court also found that the use of the phrase "supervising attorney" in the franchise's advertisements was deceptive. He noted that customers were invited to "chat" with the supervising attorney but not told that they cannot rely on the attorney's advice. To prevent harm to consumers, Judge Small enjoined the franchise from touting the services of a "supervising attorney" to customers. Third, he concluded that We The People engaged in the unauthorized practice of law in North Carolina because it prepared the documents for filing in a court of law. While section 110 provides a limited exception under which bankruptcy petition preparers may prepare documents for filing in bankruptcy court, Judge Small said that the assistance provided by We The People to customers goes beyond what bankruptcy petition preparers may lawfully do. Consequently, he certified this issue to the District Court pursuant to Section 110(i)(1). He also enjoined the franchise from distributing workbooks to customers to fill out as part of its service. Fourth, he reaffirmed his finding that the documents prepared by We The People were deficient in that they failed to include the certifications and disclosures required to be made by bankruptcy petition preparers. In the future, the franchisor employee who prepares the petition will be required to sign it and disclose his Social Security number. The operator of the franchise will also be required to disclose his involvement in the filing and disclose the fee paid by the customer for the service.
 
I cannot resist noting that We the People was hoist by its own petard in claiming that it provides no legal services. Based in part on that, the court concluded that WTP can charge only what a typist charges and must provide all the information on the bankruptcy papers required of petition preparers. I think WTP's misleading way of doing business is shown also by its calling itself "We The People" and advertising "No Lawyers," which implies that WTP is assisting citizens with their legal matters by replacing those greedy lawyers who charge too much for services that really don't require a law degree. After all, if WTP really wanted to be straight about what it does, it could call itself the "We The People" typing service. (It would be kind of like the "Stand Up For Your Rights" dry cleaners or the "I Pledge Allegiance" termite inspectors--I am sure some of you can think of some better names--except those hypothetical companies would not be attempting to mislead as to the nature of their services by the use of such names.) But of course WTP would never call itself that. The very incongruity of "We The People typing service" illustrates the misleading premise upon which WTP operates. It wants potential customers to think it replaces lawyers.

FLORIDA SUPREME COURT SANCTIONS "WE THE PEOPLE" FOR UNAUTHORIZED PRACTICE OF LAW
On April 29, 2004 the Florida Supreme Court issued its opinion in The Florida State Bar v. We The People. The court found that in five cases employees of We The People had engaged in unauthorized practice law, by advising bankruptcy clients (as well as divorce and will clients) on legal remedies, which forms to prepare and how to prepare them, correcting clients' errors, and communicating with third persons such as adversary parties on behalf of the clients, notwithstanding that WTP hired a licensed Florida attorney to provide legal advice to their customers. The Court enjoined WTP from any such activities, and assessed $9,000 in sanctions.
The Florida Bar v. We The People Forms and Service Center of Sarasota, Inc. et al. No. SC02-1675
 

Lenders Sink U.S. Soldiers Into Debt
By RUSS BYNUM, Associated Press Writer
December 17, 2004, 2:34 AM EST

FORT STEWART, Ga. -- On Gen. Screven Way, the one-mile strip of fast-food joints and pawn shops leading to the front gate of Fort Stewart, getting a cash loan of $100 to $500 is about as easy as buying a cheeseburger. Numerous strip-mall businesses bear names like Check Into CA$H ("Need Cash Today? It's Easy as 1-2-3"), First American Cash Advance, Gold Check C.S. Payday Advance, and PJ Cash ("Civilian and Military Welcome").

Fort Stewart has declared these so-called payday lenders enemies at its gate, accusing them of preying on U.S. troops with high-interest, short-term loans that plunge them deep into debt. "It's like riding a merry-go-round -- once you get on, it's hard to get off," said Frederick Sledge, an emergency relief officer at Fort Stewart whose office gives interest-free loans to soldiers in financial trouble. Military bases across the nation have become magnets for payday lenders, which charge fees as high as $30 every two weeks per $100 borrowed -- equal to a 720 percent annual interest rate.

Earlier this month, officials from Fort Stewart and Kings Bay Naval Submarine Base urged Georgia lawmakers to crack down on such loans, which are illegal under state law but thrive because of lax enforcement. Lt. Col. Russ Putnam, a Fort Stewart lawyer, told legislators that stress over paying off payday loans hurts troop morale and the combat readiness of the post's 3rd Infantry Division, which led the assault on Baghdad. In extreme cases, soldiers saddled with debt must be discharged. "When we lose those people because of payday check cashing, they're as good as dead to us. They are gone," Putnam told the lawmakers.

The Community Financial Services Association, which represents about 15,000 payday loan stores nationwide, denies its members are taking advantage of soldiers. In March, the association urged its lenders to suspend the collection of loan payments by troops sent to the war in Iraq. The CFSA says that in any case, only about 2 percent of customers are active-duty military.

Jet Toney, a lobbyist for payday lenders in Georgia, said perhaps the military needs to focus more on educating troops about money instead of bashing payday lenders as predators. "They're not preying on anybody -- they're just open for business," Toney said. "It strikes me hard that the military protests so much when they have some responsibility on their end as well. How many 18-to-22-year-olds make perfect financial decisions?"

Navy Petty Officer 2nd Class Jason Withrow, who works on a nuclear submarine at Kings Bay, took out a payday loan to make ends meet after being hurt in a car wreck. A back injury had forced him to drop his second job loading beer kegs at the Navy exchange. Withrow soon found himself taking out loans with other payday lenders to pay the interest on his initial advance. "In five months I spent about $7,000 in interest and didn't even pay on the principal $1,900," said Withrow, 24, of Brooklyn, Mich. "I was having marital problems because of money and didn't know what to do for Christmas for my kid." He finally asked his commanders for help. The base emergency relief office agreed to pay off Withrow's loans. Now he has a schedule to repay the money over 18 months, with commanders watching over his finances. "I will never go back to these idiots," Withrow said of his lenders.

Other bases say they have had similar problems with troops sinking into payday debt. The lenders "are targeting the post primarily because of the assurance they'll be paid," said Richard Bridges, spokesman for Fort Carson, the Army post in Colorado Springs, Colo. Lenders know they will recoup their money because they can get the Army to help them collect. Soldiers who do not pay up can face a court-martial and loss of security clearance, and in some cases are kicked out of the Army.

At Fort Carson a few year ago, officials began requiring lenders who advertise in the post newspaper to list their interest rates, some of which were as high as 560 percent. At Fort Bliss, Texas, officials at the Army Emergency Relief office estimate nearly a tenth of the 10,000 active-duty troops stationed there have needed financial counseling because of payday loans and other debt problems, such as high-interest rent-to-own plans and bounced checks. Georgia law caps annual interest rates at 60 percent, but violations are a misdemeanor and rarely prosecuted.

Yvette Walters, the wife of a Fort Stewart soldier, took a different approach, filing a class-action suit against Heritage Bank after taking out cash advances at annual interest rates of 340 to 592 percent. The bank settled last year by agreeing to pay $1.9 million to more than 11,500 people, many of them military.

Associated Press writers Erin Gartner in Denver and Chris Roberts in El Paso, Texas, contributed to this story. Copyright © 2004, The Associated Press

COUPLE AWARDED $940,000 FOR CREDIT REPORT MISTAKES
Dec. 8, 2004 - a federal jury has awarded a Fresno, California couple $940,000 against Trans Union, LLC, a Chicago-based credit corporation after the agency failed to correct mistakes on their credit report. The award was brought under the Federal Fair Credit Reporting Act.

The issue arose over certain IRS tax liens inadvertently asserted against the plaintiffs. The IRS took steps to remove the lens, but the plaintiffs, Raffi and Deborah Garabedian, testified they tried for years in vain to force Trans Union to delete them from their credit report. Other errors on the credit reports were also alleged

LENDERS MAY SEE LOANS TO CHAPTER 13 DEBTORS AS A NEW MARKET
The 1.5 million U.S. households filing for personal bankruptcy every year offer a sizeable niche market for lenders—if they could just figure out who was least likely to get into financial trouble again. Apparently, First Hallmark Mortgage Corp has found a way to tap this market. The New Jersey-based mortgage lender targets borrowers in Chapter 13 bankruptcy repayment programs who own their homes.

Chapter 13 involve a court-administered debt workout program through which the borrower repays a sizeable portion of his/her unsecured debt, at the same time maintaining ownership of their assets such as primary residence and automobiles. First Hallmark specializes in debt consolidation loans that fold existing mortgage and credit card debt into a two-year hybrid adjustable rate mortgage. The company markets its product through direct mail and referrals from bankruptcy attorneys. The key is to find borrowers who are able to stay current on their repayment plans and mortgages for two or three years. Borrowers who receive a First Hallmark consolidation loan and stay current with payments are offered the chance to refinance into a lower-cost conventional mortgage. Bruno Viscariello, president of First Hallmark, told the industry newsletter Inside Mortgage B&C Lending (Bethesda, MD) that about 80% of the company's customers are able to take advantage of the refinance option. About half of the company's $15.5 million in monthly originations comes from borrowers in bankruptcy. The company operates in New Jersey, New York, Pennsylvania and Florida.
SOURCE: SpotlightonFinance.org

A letter from one of our soldiers in Iraq - please read:

This is from Bernie McLaughlin who is an attorney who practices in Lake Charles. He is also a Reserve Officer now serving in Iraq. It was sent on 10/28/04

Subject: Full moon over the Tigris
At about 2000 hrs, I was on a second floor balcony of the Embassy Annex looking out over reed swathed banks of the Tigris River, a full moon shimmering over the waters and as I looked out thru the date palm trees, the amplified voice of a meuzzin chanting Ramadan evening prayers-it was "gameel" ("beautiful" in Arabic).

The never-ending tragedy in this country is the daily quotient of violence exacted by insurgents and terrorists whose appetite for horror appears insatiable. Yet it is easy for someone not familiar with the daily cycle of normal life which co-exists with the violence to overlook all that is good here and the beauty described above.

Yesterday I attended an hour long meeting with the Chief Judge of the Council Of Judges (the equivalent of the Chief Justice of the US Supreme Court)- he is a gentle and kind man, bespectacled and gracious, learned in the law and a pillar of courage given the 4 attempts on his life-several burned out cars litter the back alley of the Ministry of Justice complex which give silent testament to this. 

As we talked about the situation in Iraq, he made the comment (in relation to the recent execution deaths of 50 Iraqi Army soldiers) that he hoped "the world would look beneath the ashes for the good things in Iraq"- he repeated it and I had a thought of the legend of the phoenix rising from ashes-he exemplified what I hear everyday from Iraqi's - that the country although traumatized by 35 years of violence will not stray from the path to freedom and stability.

What is encouraging are the daily signs of planning and building for the future; new hotels under construction, new dress and garment businesses started, the boom in electronics of all kinds (computers, TV's, DVD players, satellite dishes); new restaurants; new buildings going up. The real estate market is thriving here-dichotomies which can only be explained by the fact that people have hope for the future and that the violence, no matter how graphic, is indulged in by a definite minority.

The majority move on with jobs, family, education. New currency has been issued - it is vibrant and colorful; depicting scenes in Iraq and none is graced with Saddam's visage. The internet is thriving here with young Iraqi guys surfing the net trying to hook up with enlightened Iraqi women - I'm quite sure the thought of this reduces the Wahabbi and Salafist extremists to fits.

I believe the elections here may surprise people. There have already been quite a few local, city and regional elections of various councils. Guess what? The Iraqi's favor and lean towards secular candidates over clerics.

Most troops and civilian contractors here seem to think the insurgents/terrorists definitely want to influence the US elections in favor of Kerry and against Bush. Even the Iraqi's believe this to be the case. Practically everyone I talk (both military and civilian) to solidly supports Bush - they believe that a Kerry win would be the death knell of Iraq and lead to abandonment of the effort here and a clear victory for the terrorists.

There is one institution in Iraq that is thriving - a flower blooming in the desert - it is the university system. Several professors I have met are thrilled at the resurgence of enrollment in Iraq's 20 major public universities. Enrollment has surged in Baghdad's 4 universities; Baghdad University, Al-Mustansiriya University, Al-Nahrain University and there is another one whose name I cannot recall. Approx. 72,000 students in Baghdad's universities alone. They are clearly a force to be reckoned with. They express themselves willingly; their opinions flow throughout the city. They protest policies they don't agree with, they debate publicly, and they sit at tables with petitions-all unthinkable 18 months ago. They are bright and full of hope. They and the professors are the heart and souls of the future-they are not deterred by car bombs and AK-47's.

Brings to mind Horace's writings: "Amid the hope and worry, the fear and anger believe that each day which breaks is your last: the unhoped for hour will be a welcome surprise." Horace's Epistles (Book 1 Ep. 16)

Iraq is rising from the ashes-