Nebraska Debt and Bankruptcy Blog

Nebraska Debt and Bankruptcy Blog

Wells Fargo Using Arbitration Clause to Dismiss Fake Account Cases

Posted in Bankruptcy Fraud, Fraud

Wells Fargo

Wells Fargo is asking courts to dismiss lawsuits brought by customers for damages caused by fake accounts created by bank employees because of arbitration clauses signed by those customers when they opened bank accounts.

A typical arbitration clause contained in the fine print of bank account agreements looks like this:

ARBITRATION AGREEMENT

Binding Arbitration. You and Wells Fargo Financial National Bank (the “Bank”), including the Bank’s assignees, agents, employees, officers, directors, shareholders, parent companies, subsidiaries, affiliates, predecessors and successors, agree that if a Dispute (as defined below) arises between you and the Bank, upon demand by either you or the Bank, the Dispute shall be resolved by the following arbitration process. However, the Bank shall not initiate an arbitration to collect a consumer debt, but reserves the right to arbitrate all other disputes with its consumer customers. A “Dispute” is any

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Why Long-Term Financial Goals Are So Important

Posted in Budgeting, Chapter 13, Chapter 7, Medical Bankruptcy

Might as Well Win it

Do you know where you want to be in 20 years? What does that picture look like?

When facing debt problems, it is very important to envision what you want your financial life to look like in 20 years.  Because when you fail to have a clear vision of what the ideal life looks like, you tend to repeat the present problem.  Sure, you may get out of today’s financial mess, but then old habits return and the problem resumes.

When facing that life changing debt struggle, it is very important to write down very specific financial goals.  Very specific goals.

  • I want my home paid off by age 55.
  • I will save up 6-months of wages in a savings account.
  • I want to take my grandchildren to the beach every summer until I die.
  • I want to quit my

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Chapter 13 Success Rate Greater Than Credit Counseling Plans

Posted in Chapter 13, Chapter 7, Credit Counseling

Champions team

Do Chapter 13 payment plans really work?  How many customers actually finish the plan and become debt free?  How does it stack up to other options like consumer credit repayment plans? If you don’t know how likely a plan of action will succeed, how do you know what to do?

Historically, only one in three chapter 13 cases are completed nationwide.  That is a pretty bad success rate in my opinion.  Law professor Katherine Porter (@bankruptprof)  wrote a provoking article about chapter 13 success rates in 2011 that basically called for an elimination of chapter 13 cases.  Her study confirmed the dismal success rate of these cases.

Chapter 13 is a pretend solution.  I use this term to mean a social program that does not work as intended but is not critiqued or reformed because its flaws are hidden.

That study always struck

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Has Wells Fargo Committed Bankruptcy Fraud?

Posted in Bankruptcy Fraud, Chapter 13, Chapter 7, Credit Cards

wells-fargo-scams

Wells Fargo Bank has admitted to opening millions of customer accounts and credit card accounts without customer authorization since 2005.  Stories have emerged of a bank gone wild where employees working in an intense sales culture felt pressured to open new accounts to meet sales quotas.

Wells Fargo has agreed to pay $185 million in fines to the Consumer Financial Protection Bureau.

So what happens when customers file bankruptcy on credit card accounts fraudulently opened without any authorization?  Naturally, Wells Fargo filed bankruptcy Proof of Claims with the court itemizing the amounts not legally owed.  And that reality leads to the next logical question:  Has Wells Fargo committed bankruptcy fraud for filing false proof of claims?

False Claims—18 U.S.C. § 152(4):

A person who…knowingly and fraudulently presents any false claim for proof against the estate of a debtor, or uses

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Time to Tax Carpetbagger Debt Buyers?

Posted in Credit Cards, Default Judgment, Garnishment, Junk Debt

carpetbagger

Junk debt buyers are the modern version of a post Civil War carpetbagger as they suck money out of every county in the State of Nebraska without contributing anything in return.  I cannot think of a single positive thing these debt collectors contribute to our state.

Junk debt buyers typically purchase defaulted credit card accounts for about 3 to 7 cents on the dollar.  Common debt buyers include Midland Funding, Portfolio Recovery Associates, Calvary Portfolio Recovery, Cach LLC, Asset Acceptance LLC, and many others.

Debt buyers clog our courts with collection lawsuits.  In a sense, the debt buyer is in a race to recover its investment before the debtor is garnished by another creditor or files bankruptcy, so they are quick to file lawsuits after acquiring the debt.

Most junk debt buyers are located outside the State of Nebraska.  Consider the damage they do to our state:

  • Nebraska courts are

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Dave Ramsey’s Debt Snowball

Posted in Budgeting, Chapter 7, Credit Cards, Credit Counseling, Uncategorized

Dave Ramsey

The most famous name in the getting out of debt industry is Dave Ramsey.  As a young man Dave himself was in a pile of debt and wound up filing bankruptcy. The pain of that experience lead him on a quest to learn about personal finance and he began a career in advising others how to get out of debt.

I’m a talk radio/podcast junkie.  I don’t care what the topic is as long as it is interesting.  Dave Ramsey is the host of a nationwide talk show and it played on the radio as I was driving home.  So, as I counseled clients every day about how to file bankruptcy, I would listen to Dave on the way home explaining how to avoid it.  Gosh, was I doing my clients wrong by not teaching them the tough road out of debt that Dave advocated?

The hallmark

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Riding Through the Chapter 7 Backdoor: A Story of Car Loans in Bankruptcy

Posted in Chapter 7, Reaffirmation Agreement

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There is a lot of chatter going on among Nebraska bankruptcy attorneys about reports of court hearings where debtors are being told they can keep a car even if they choose not to reaffirm the car loan as long as payments are kept current.

That’s news to me and many of my colleagues.  The Bankruptcy Reform Act of 2005 was supposed to end the Ride-Through option.  A “ride-through” is where a lender cannot legally repossess a vehicle even if the debtor does not sign a formal Reaffirmation Agreement as long as the loan was paid current.

A reaffirmation agreement is an agreement to pay a debt (typically a home or auto loan) listed in a bankruptcy case.  Reaffirmations basically pull a debt out of the bankruptcy and makes a debtor liable again for the payment.  Secured debts tend to be reaffirmed in Chapter 7 and unsecured debts almost never.  Clients

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Bankruptcy Attorney Sanctioned for Using DocuSign

Posted in Uncategorized

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A bankruptcy judge for the Eastern District of California sanctioned attorney Pauldeep Bains for filing a bankruptcy petition signed with digital signatures.  (See In re Mayfield, Case #16-22134).

The attorney sent completed bankruptcy documents to the debtor to sign via a digital signature service called  DocuSign.  Bankruptcy judge Robert Bardwil imposed sanctions for violations of bankruptcy rule 9004-1(c)(1)C) & (D).  Those rules state the following:

(C) The Use of “/s/ Name” or a Software Generated-Electronic Signature.  The use of “/s/ Name” or a software-generated electronic signature on documents constitutes the registered user’s representation that an originally signed copy of the document exists and is in the registered user’s possession at the time of filing.

(D) Retention Requirements When “/s/ Name” or a Software-Generated Electronic Signature Is Used.  When “/s/ Name” or a software-generated electronic signature is used in an electronically filed document

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Digital Signatures in Bankruptcy Cases

Posted in Chapter 13, Chapter 7

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Nebraska is the 16th biggest state in the USA, but we rank 43rd in population density.  In fact, Nebraska has more cows than people by a ratio of 3 to 1.

Bankruptcy is a specialized area of laws these days, especially after enactment of the Bankruptcy Reform Act of 2005.  Attorneys in sparsely populated areas of the state generally do not handle bankruptcy cases, so our firm is routinely hired by clients throughout our big state.  (This is actually a wonderful aspect of practicing bankruptcy law since we get to know folks in every square inch of the state and learn about their communities.)

One challenge we face in a state that stretches 430 miles across is getting documents signed and returned in a timely fashion.  This is especially critical in bankruptcy cases since we must provide the court with a precise “snapshot” of a debtor’s financial situation on the

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Discrimination Claim Lost when Bankruptcy Schedules Not Amended

Posted in Chapter 13, Chapter 7, Exempt Property

A few weeks ago I wrote an article to warn plaintiff attorneys to be careful to ensure that their clients who have previously filed bankruptcy to ensure that all claims they have against third parties are reported on the bankruptcy schedules.  (Plaintiff’s Attorneys Beware: Your Client’s Bankruptcy Case is About to Sock You Right Between the Eyes)  Well,  . . .  it just happened to a lady in Minnesota. (See Cover v J.C. Penny Corporation, Civ No 15-515, District of Minnesota).

The significant aspect of this case is that the debtor, April Cover, failed to report a discrimination claim on her bankruptcy schedules but she did verbally tell the bankruptcy trustee about the claim.

Not good enough says the Minnesota court.  Actual verbal notice of a claim is not enough.  Audio recordings of the court meeting between the trustee and the debtor disclose that the discrimination claim was reported to the trustee.  There

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