Times Reports on Credit Card Suits, Modification of Mortgages, Evictions in Chicago and More (Consumer Law & Policy Blog)

Yesterday's Times included "When Plastic Seduces, A Reckoning Awaits," about cases in the New York City Civil Court against consumers on credit cards. An excerpt:

As the final stop on the subprime lending train, the Civil Court has become the 21st-century debtors’ court. Filings have nearly tripled since 2000. Of these, court officials project that about 350,000 this year will involve debt on credit cards. * * *

* * *

[The article then describes how Juan Vega, a security guard making $11 an hour, had obtained a credit card on which the lender claimed he owed $1,400.]

“They gave me a $500 spending limit,” he said. “So it was less than that. The rest to get it to $1,400 was interest, fees.”

The negotiations had been two sentences long.

“The lawyer said, ‘We can finish this for $900,’ and I said, ‘O.K.,’ ” Mr. Vega said. * * *

The lawyers for the banks had virtually no documents on the cases, just printouts with names, account numbers and the amount that was supposedly owed. When it was Miranda Gee’s turn, she produced papers showing that she held a different account with Capital One than the one listed on the printout, which claimed that she owed about $1,000.

“They brought me here, but it wasn’t my account at all,” Ms. Gee, 43, said. “They put a hold on my bank accounts with Chase for twice the amount they claimed.”

The judge agreed to sign an order unfreezing her savings with Chase while Capital One investigated to make sure it had the right account. Since Mr. Funk, the bank’s lawyer, had no paperwork, he asked Ms. Gee if he could copy her file. She said yes.

Reports like these in which it appears that creditors are obtaining judgments without being able to prove that the money is indeed owed make me wonder how many of these claims, many of which sound like they end up in default judgments, are in fact owed, or if the consumer did indeed take on the debt, whether the claimed amount is inflated.

Friday's Times brought an op-ed piece by Harvard Law Student Eric S. Nguyen, titled "Fight for the Family Home." Nguyen argues that Congress should modify bankruptcy laws to permit modification of terms in mortgages on primary residences. A pretty persuasive excerpt:

Consider two different couples facing foreclosure. The first rents a penthouse apartment to live in and then takes out a loan to purchase a house to rent out as an investment property. After racking up a mountain of credit card charges, the couple files for bankruptcy.

The second couple has two young children and buys a home to live in. When illness keeps the mother from working for six months, the family falls behind on bills and files for bankruptcy. Which family should have a chance to keep its home?

If you said the family with children living in their own home, you might be surprised to learn that Congress disagrees. * * *

On Thursday, the Times published "Sheriff in Chicago Ends Evictions in Foreclosures." The article explains:

Sheriff Dart said he took the measure because an increasing number of the residents being evicted were renters who might have been dutifully paying their rent, and might have had no knowledge that the owner was behind on the mortgage.

On Wednesday, the coverage shifted to online selling in Europe with "Europe Prepares Consumer Rights Plan." The new proposal would provide for a 14-day cooling off period, among other changes. I don't know about European sales laws, but that would be an extraordinary length of time for a cooling off period in this country.