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New Mortgage Disclosures coming to help Americans

Spring Cleaning and Home Buying

Spring cleaning and home buying — it’s that time of year again.  The sun is shining longer, flowers are starting to bloom, and many of us are emerging from our winter hibernation wanting a fresh start.  It’s no coincidence that this is the busiest time of year for new home purchases and there are some important things you should do before you start looking.

  • Check your credit report.

Before you apply for a mortgage, it’s important to examine your credit report.  Go to https://www.annualcreditreport.com/index.action and request copies of your report from each of the three major credit bureaus.  If you see data that doesn’t look right, initiate a dispute but be sure to support your dispute with written proof of the mistake.  If you dispute prior to applying, you can avoid delays or even lost purchase opportunities should something erroneous be listed on your report.

  • Consider the ratio of your available credit to used credit.

Do you have open credit cards or home equity lines of credit with high balances?  Don’t close credit lines but instead, think about paying down debt on revolving accounts so that you have a good ratio of used credit to available credit.

  • Verify any liens that may be on your current home.

If you currently own a home you’re thinking of putting on the market, visit your local recorder of deeds’ office and verify no liens exist.  Working to remove or pay off liens after you’ve started the buy/sell process may be too late.

  • Beware of re-finance offers that appear to good to be true.

Banks and mortgage companies (online or “brick and mortar”) frequently send solicitations promising certain rates.  But these offers have fine print and usually require an appraisal to qualify.  Don’t wait for a denial letter because your home isn’t worth what you thought it was — check local listings, speak with a qualified home appraiser, and have the data before you respond to a credit solicitation.

Make your home buying (or selling) experience a bit easier and be armed with the knowledge you need about home values, your credit, and your overall finances.  Happy Spring!

Practical Tips For Trading In Your Car

Trading in your car can be an issue if you don’t have great credit.  You need to be especially careful when trading in your car that still has an outstanding balance owed.

Why?  Because auto dealers often “spot deliver” cars.  That means the dealer gives you the keys to a new (or new used) car and lets you drive it home, but you haven’t been financed yet.  If your financing application ends up rejected, the dealer likely won’t pay off the balance on your trade-in.  So what should you do?

First, if you have an upcoming car payment due on your trade-in, pay it.  This will protect your credit rating if the new car loan falls through and you have to pay off the old car.  Just make sure you get credit for all the payments you make.  Don’t let the dealer finance you on a larger balance than what you actually owe.

Second, know what your car is worth before you consider trading it in.  Check out auto valuation reports and think twice before trading in a car that has “negative equity” (you owe more than it’s worth).  The dealer will end up adding those payments to your monthly obligations on the new car.  Check out https://www.consumer.ftc.gov/articles/0257-auto-trade-ins-and-negative-equity for more tips if you owe a significant balance on your trade-in.

Finally, keep your old car and don’t take the new car home.  Until you receive financing confirmation on the new loan, don’t leave your trade-in at the dealership.  Tell the dealer you want to wait until you have financing approval before taking delivery.  To do this, make sure you visit dealership’s early in the day – don’t arrive in the evening when most banks and lenders are closed and you won’t have confirmation of financing until the next day or even beyond.

But most importantly, don’t be rushed or intimidated by a dealer trying to make a fast sale.  You may be making payments for as long as 72 months and you should be sure you fully understand what you’re agreeing to.  Take your time.  Ask for copies of everything you sign.  And don’t listen to a dealer who tells you trading in your car is the best option, especially if you still owe on the loan.


Debt Collection Abuse, Consumer Law Services at Bardo Law PC

Alternative Energy Suppliers

Alternative energy suppliers allow residential utility customers to pick the company that supplies their electricity or natural gas.  Find the current list of Illinois alternative suppliers at https://www.pluginillinois.org/suppliers.aspx.  These suppliers often offer big savings but the results have been decidedly mixed.  Suppliers promise lower prices for consumers because electricity or gas is purchased wholesale and then resold in a “competitive” environment.  But numerous complaints have been filed demonstrating these low price promises have not been met.

For example, in Zahn v. North American Power & Gas, LLC, the consumer plaintiff alleged that she never received the low advertised “New Customer Rate.”  Instead, there were times when she was charged nearly triple what ComEd would have charged — http://law.justia.com/cases/illinois/supreme-court/2016/120526.html.

The energy supplier argued the consumer’s claim failed because energy price complaints could not be filed in court.  The Illinois Supreme Court disagreed.  While pricing claims against public utility companies must be filed before the Illinois Commerce Commission, alternative suppliers are not public utilities.  Therefore, false advertising and unfair pricing claims can now be filed in court.

The Zahn decision is an important one because consumers will now have additional redress available to them if their suppliers do not live up to their promises.

Wrongful debt? Bardo Law can help you deal with credit fraud, wrongful debt and defense.

Debt Collection Update

A new debt collection update was published earlier this week.  Unfortunately, consumers continue to struggle to resolve their collection issues.  Here are some highlights from the CFPB’s January 2017 report:

  • Approximately 1 in 3 consumers with a credit record report they have been contacted by at least one creditor or debt collector during the year prior to the survey.  72% of those consumers reported being contacted about two or more debts;
  • Past due medical bills, credit cards, and student loans are the most common types of debts in collection;
  • More than 50% of consumers contacted about debts did not recognize them — they report that either the debt is not theirs or they do not agree with the balance;
  • While 1 in 7 consumers contacted about a debt were sued on it, only 26% reported attending a court hearing;
  • More than 1/3 of consumers contacted about a debt receive at least four collection contacts per week, with 17% of that group reporting at least eight contacts per week; and
  • Only 1 in 4 consumers reported success in having collection contacts stop after making such request.


What does this teach us?  First, there is still a high incidence of incorrect debt collection efforts.  More than half of surveyed consumers did not owe the debt, were contacted about a debt owed by a family member or needed to challenge the amount of the debt.  Second, consumers are not protecting themselves by appearing in court when sued.  We need to continue to educate consumers about the need to defend themselves.  At minimum, if a debt is properly being collected, settlement is often a far better option than risking a judgment.  Consumer debt judgments can remain on credit reports for ten years, and can lead to garnishment and other citation proceedings.

Finally, as noted by the Consumerist:

Although ensuring that consumers are treated fairly when it comes to repaying debts is a priority for federal regulators, the way in which debt is sold and transferred among collectors is a growing concern.


The fact that a sampling of these sold debts show most were purchased for cents on the dollar, the personal data shared about consumers is cause for some concern.  According to the CFPB, debt portfolios often contain names, Social Security numbers, account numbers, and dates of birth and, “In some instances, the CFPB’s review of 298 debt portfolios found unencrypted, identified personal information had been available to any visitor to a debt marketplace website.”

There must continue to be heightened scrutiny over debt purchasers to ensure compliance with consumer privacy rights.

Be Wary of Year-End Collection Calls!

As 2016 winds down, debt collectors making collection calls tend to get more aggressive.  Companies are trying to close out their books and write off accounts as “bad debt.”  Calls start to increase this time of year and you should be prepared in case you get one.  So, what do you need to know before talking to a debt collector?

  • Ask for proof of the alleged debt in writing and make sure you know who you allegedly owe.  Get the name, employee ID, telephone number or e-mail address of the collector who called you. Don’t ever agree to make a payment unless you have something in writing from the collector.
  • Find out what the alleged debt is for.  Do you recognize the account?  Do you recognize the amount?  Check your credit report after the call to see whether the debt is being reported.  Your credit report may also help you figure out how old the debt is and what the outstanding balance is.
  • If you recognize the debt, go back through your bank records to see when you last made a payment.  It’s important that you do NOT re-start the statute of limitations (the deadline for filing a lawsuit).  A $5, $10, or $25 payment on an old debt can make the entire balance due and owing again.  Talk to a lawyer about what statutes of limitations may apply on your accounts.
  • Take notes on what the collector says to you.  Did the collector threaten to mark your credit report or sue you?

If you have any questions about collection calls you may be receiving, talk to a lawyer in your state.  The National Association of Consumer Advocates has a “Find an Attorney” resource, available at http://www.consumeradvocates.org/find-an-attorney.

You can also submit a complaint against collection agencies with the Consumer Financial Protection Bureau online at http://www.consumerfinance.gov/complaint/.  There are state and federal laws (namely, the Fair Debt Collection Practices Act) that require collectors treat you fairly.

Try not to give in to high pressure tactics.  It’s important to know your rights BEFORE it’s too late.

Fair Credit Reporting & Consumer Law - Bardo Law PC

Credit Repair Scams

Credit repair scams are widespread and many consumers don’t realize they can (and should!) try and fix credit reporting errors themselves.  Watch out for companies that claim they can “guarantee results,” or “erase bad credit.”  These companies often charge steep fees and make promises they can’t keep.  Watch out for any credit repair company that demands fees before performing any work or tells you to dispute information that is correct.  Even though it may seem unfair, if you do have a negative payment history, time and debt repayment will help raise your credit score over the years.  You should watch out for companies that tell you to dispute 30, 60 or 90-day late payment records if those payments are accurately reported.

How can I fix my credit report myself?

  • If you have applied for credit, a job or insurance, and you’ve been denied, you’re entitled to receive a free credit report.   Make sure you ask for your report within 60 days of receiving notice you were denied.
  • You’re also entitled to a free copy of your credit report every year from the nationwide credit reporting companies — Equifax, Experian, and TransUnion.  To order your report, visit annualcreditreport.com, or call 1-877-322-8228.
  • It is FREE to dispute mistakes or outdated items on your credit report.   So once you receive your reports through either method above, review them and circle any problems.  Then, write to the credit reporting company and the company who reported the information to tell them what the error is and why they should fix it.  Because the credit reporting companies and the information reporter must provide accurate information, and must correct inaccurate or incomplete information, there is no reason to pay anyone to handle this dispute for you.
  • The Federal Trade Commission has a sample letter you can use to help you write your dispute — https://www.consumer.ftc.gov/articles/0384-sample-letter-disputing-errors-your-credit-report.

If I did use a credit repair company, how do I know if it’s legitimate?

  • A credit repair company MUST tell you your legal rights in writing, exactly how much the repair services will cost, and how long the process will take.
  • If you do sign a contract, you have a 3-day right to cancel it.
  • Check out the Credit Repair Organizations Act or call an attorney.  The Act bars companies from demanding advance payment and gives consumers the right to file a legal dispute if they have been defrauded.

Consumer Protection In 2017 And Beyond

With the election behind us, there are many questions about what consumer protection role the Consumer Financial Protection Bureau (CFPB) will have going forward.  Today’s edition of The Consumerist notes: “Even before the CFPB launched in 2011, it’s been opposed by many in the financial industries, and by the lawmakers they back.”  Many banks, debt collectors, and payday loan lenders have already paid back millions to consumers as a result of the CFPB’s work and investigations so a diminished role could have a negative consumer impact.

Every six months, the CFPB releases its semi-annual report that highlights its important work.  According to the Spring 2016 report:

In the six months covered by this report, our supervisory actions resulted in financial institutions providing more than $44 million in redress to over 177,000 consumers. During that timeframe we also announced orders through enforcement actions for approximately $82 million in total relief for consumers who fell victim to various violations of consumer financial protection laws.

So, what can you do to ensure the continued viability of the CFPB?

  • Talk to your U.S. Representatives and Senators.  Contact my office if you would like specific information on your district’s representatives and who to call or write.
  • File a consumer complaint online with the CFPB at http://www.consumerfinance.gov/complaint/.
  • Learn more about other advocacy organizations, such as the National Association of Consumer Advocates and National Consumer Law Center.

Most of all, stay informed and encourage your friends and family to do the same.  Don’t ignore collection letters, be sure to monitor your credit report, and feel free to report bad acts to the Better Business Bureau and your local Attorney General.  The more we let our political leaders know consumers need assistance, the harder it will be to chip away at those protections.  It’s a long road ahead but together, we can continue to battle injustice.

Prepaid Debit Card Rules Released

Prepaid debit card rules have never been as stringent as those that apply to other debit and credit cards.  That’s why the Consumer Financial Protection Bureau’s October 2016 approval of prepaid debit card rules is so noteworthy.

First, what is a prepaid debit card?  It’s a card that usually does not require a credit check and is not tied to an established bank account.  Instead, consumers can add or subtract funds to a reloadable card.  These cards come with downsides.  The fees charged on each transaction can vary from card to card and can be rather hefty.  Also, you can’t use prepaid debit cards to build your credit rating.

Because these cards have traditionally been marketed to consumers with low credit who don’t have checking accounts, new regulations are aimed at increasing cardholder protections.  The Consumer Financial Protection Bureau’s new rules provide, in part:

  • enhanced disclosure requirements
  • agreements to be posted online
  • account information to be available by phone, online or in writing upon request
  • error resolution processes
  • protections against unauthorized withdrawals
  • limitations on consumer liability for fraudulent transactions

According to the Bureau’s press release, the goal is to “Know Before You Owe.”  http://www.consumerfinance.gov/about-us/newsroom/cfpb-finalizes-strong-federal-protections-prepaid-account-consumers/:

The new rule requires financial institutions to limit consumers’ losses when funds are stolen or cards are lost, investigate and resolve errors, and give consumers free and easy access to account information. The Bureau also finalized new “Know Before You Owe” disclosures for prepaid accounts to give consumers clear, upfront information about fees and other key details. Finally, prepaid companies must now generally offer protections similar to those for credit cards if consumers are allowed to use credit on their accounts to pay for transactions that they lack the money to cover.

Some employers pay their workers using these cards and prepaid debit cards are one of the fastest growing consumer financial products.  These new rules are the first step towards ensuring prepaid debit cards don’t avoid consumer protection scrutiny.

Arbitration rules are stacked against consumers

Arbitration Update

In a new arbitration update, six United States Senators have spoken out against the enforcement of Wells Fargo’s arbitration clause:

“A major reason that these outrageous practices continued for at least five years is that Wells Fargo’s customer account agreement includes a forced arbitration clause,” reads the letter. “These clauses eliminate consumers’ ability to bring a claim in open court or to band together in a class action, before any dispute has arisen. Forced arbitration clauses deny access to the courts even when consumers are seeking to enforce their rights under fundamental state and federal laws. Instead, consumers must seek justice individually, on a case-by-case basis in closed-door arbitration proceedings that are often stacked in favor of the corporate defendant.”

Given recent revelations that Wells Fargo opened fraudulent accounts for thousands of consumers who didn’t know or didn’t ask for them, it’s questionable whether the victims of this conduct will be able to seek relief in court.  As the Senators note in their letter to Wells Fargo CEO John Stumpf, https://consumermediallc.files.wordpress.com/2016/09/9-23-16-wells-fargo-letter-re-arbitration-final.pdf, “[T]his forced arbitration system helps hide fraudulent schemes such as the sham accounts at Wells Fargo from the justice system, from the news media, and from the public eye.”  That’s because arbitration filings and decisions are not matters of public record, as are court filings.

For more on the Wells Fargo scandal, check out the Consumerist piece at https://consumerist.com/2016/09/23/senators-to-wells-fargo-ceo-dont-strip-wronged-customers-of-their-day-in-court/.  And continue to battle back against forced arbitration – if you see an arbitration clause in new paperwork you’re asked to sign, cross it out and initial your refusal to be bound.

Has A Car Dealer Rejected You For Financing?

Has a car dealer rejected you for financing?  If so, the Equal Credit Opportunity Act requires the dealer to provide you with a written statement explaining why it rejected your credit application.  The Act’s notice requirement can be satisfied in one of two ways:

  • A dealer can routinely provide written statements of reasons for credit denials to applicants; OR
  • A dealer can advise applicants they have been denied and then explain that such applicant has the right to request a specific written explanation.

Last week, the Sixth Circuit Court of Appeals ruled that a Michigan car dealer violated the ECOA by failing to provide this explanation.  The Court stated, “any ‘creditor’—middle-men included—that regularly participates in credit decisions and takes an adverse action with regard to a credit application bears the burden of providing notice under the ECOA.”  The full text of the opinion can be found at http://www.opn.ca6.uscourts.gov/opinions/opinions.php.

This ruling is important.  First, it confirms that car dealers are active participants in setting credit terms because they prepare the contracts, select the interest rate, and discuss payment terms.  Second, it lets consumers know specifically why their credit is denied so any credit errors can be fixed and follow-up applications can be made.

The Federal Trade Commission provides additional information about your rights under the Equal Credit Opportunity Act at https://www.consumer.ftc.gov/articles/0347-your-equal-credit-opportunity-rights.  Credit decisions cannot be based on your race, color, religion, national origin, sex, marital status, age, or receipt of public assistance.  Requiring credit denials to be explained in writing helps ensure decisions are not made for these prohibited reasons.