Why How Your Insurance Company Pays Claims Should Matter

Ok, this isn’t my usual debt related kind of post; but here goes.

Wednesday night I was rear-ended at a stop light on the NW Expressway.  In all honesty it was more understandable than that.  The sun was in just the wrong place to see the light change.  Nonetheless, I stopped; the woman behind me didn’t.  The back of my car was pretty badly crunched, and the front of hers was a real mess.  Anyway, I discovered soon enough that her insurance policy was in a family member’s name, the car she was driving was her husband’s; and all of this makes sense when you realize that she doesn’t have a driver’s license.  She did have a State ID card.  Yes, she does have a couple of DUI convictions.  Why do you ask?

Anyway, the next morning she calls me to tell me that she has called it in to her insurance; and she needs two additional pieces of information:  my home address (I had given her my office) and my insurance policy number.  That didn’t strike me as the kind of thing you make up, so I assume that she called it in.  I reported in to my insurance company, just like my policy requires.  Then, I waited for her company to call me; and I waited.  Finally, I called her agent’s office.  They had no clue what I was talking about, so I gave them all relevant information.  They were going to have the claims office in Enid call me; and they did.  A man called to say he was returning my call and who was I and what did I want — basically.  Once again, no clue that there has been any communication on this claim.  So, today I get a call from their National Claims center who didn’t know who was driving, didn’t know if I was hurt, didn’t know the make or model of my car or even if it was drivable.  At this point I am starting to lose my cool with what I am now calling the Larry, Moe and Curly Insurance Agency.

So, my instructions now are to take my car to their approved body shop for pictures and an estimate.  They have a location near my house and one near my office, but they are only open Mon-Fri.  So, I get to take off work for them to appraise my car.   Then, I can have them fix it or I can take it someplace else and have it fixed.  Oh, that assumes that they are going to allow the claim.  They haven’t made a decision yet, because they haven’t spoken to their insured yet.

Now, maybe it is just the bleeding heart defense lawyer in me; but I would think that if I were that company’s customer I would expect that they would be a little more proactive in protecting me from a lawsuit involving an unlicensed driver with 2 DUI convictions.  I have been annoyed at the runaround they are putting me through, but I have been appalled at how little effort they are making to protect their own insured.

So, the next time you go to buy car insurance.  Give some thought to how the company treats the people their insureds hit.  You could be preventing your own lawsuit.

Elaine

Mortgage Overcharges and Consumer Protection

Recently, Bank of America agreed to a staggering settlement for mortgage fees improperly charged by Countrywide prior to the BOA takeover.  Henry Sommer, one of the Country’s leading Bankruptcy lawyers, scholars and consumer activists has posted some thoughts about that settlement on Credit Slips.  It is well worth reading.

Elaine

Facebook in Court?

USAToday just published an article about the increasing use of Facebook and other social networking sites in divorce cases.  That really doesn’t take a genius to figure out.  Guy denies affair.  Girlfriend posts pictures.  From an evidentiary perspective, that’s sweet.

So, are there any Bankruptcy Trustees routinely searching for Debtors online?  I doubt it — at least in most cases.  However, that doesn’t mean that a Bankruptcy Trustee won’t just happen to search for something else — maybe, a lake house for himself; and run across a familiar name.  More significantly, I would expect Trustees to start searching Social networking sites in cases where they suspect something is amiss.  Cases where maybe the income history and the asset/spending pattern from the schedules don’t seem to jive.

Debtors get caught trying to conceal assets in the darnedest ways.  I haven’t heard of a Facebook exposure yet, but I’m sure it is coming.

Elaine

Student Loan Tips

I get frequent calls from people who are way over their heads with student loan debt.  It used to be that anything over $50,000 got my attention.  Boy was that the good, old days.  Now, it is going to have to be six figures before I blink.

Anyway, a blog I read pointed me to a nice discussion of the student loan collection manual published by the U.S. Department of Education.  If you are dealing with a private collector for a student loan, you will want to read this post.

Elaine

For Law Geeks ONLY

Credit Slips has posted a blog entry that brings together both a Business Week article and related source material discussing a possible insolvency filing by BP.  I don’t actually think this is likely in the short run, but it makes for fascinating reading.  I mean, if you’re a serious Bankruptcy law geek. . . .

Elaine

Debt Settlement Regulation

There is a movement afoot to increase the regulations governing debt settlement companies.  These are the companies who advertise that they can negotiate substantially reduced deals with your credit card companies.  If you have seen a banner ad that says something like, “Reduce your credit card debt by 40-50%”, odds are you have encountered a debt settlement company.

USAToday.com ran an article today on this very topic.  They interviewed a couple of people who had used debt settlement companies, one got bad results, one got good results.  Over the years I have seen a lot of clients who have used one of these companies before coming to see me.  I have them bring me there contracts.  Some of them are downright appalling.

There are two problems with the debt settlement business model.  In order to do it well you have to really work your files and you have to be very, very good.  There may be a way to do it well representing people in other States, but I don’t see how.  To do it well, in my opinion, you need to be prepared to aggressively defend collection litigation as it gets filed.  (If you are considering a debt settlement company, read the contract completely but pay particular attention to what they do with the money you send them and what they will, or more likely won’t, do if you get sued during the process.)

I have heard of a good debt settlement company in Texas.  They only take clients in their area, and I heard a presentation about them some years ago; but I no longer remember their name.  Even a good debt settlement company can’t get you out of the second problem.

If you “settle” debt by convincing a creditor to accept less than it is owed, the amount that you don’t pay will get reported to the IRS as forgiveness of debt income.  I have written about that before.  This means that unless you meet certain tests and deal effectively with the IRS, you could wind up having to pay taxes on the amount of debt that was forgiven.  Oops.

Debt settlement companies know how to say what desperate people want to hear.  Just remember the old rules.  Read everything.  Don’t sign anything you haven’t read or that you don’t understand.  When in doubt call the Better Business Bureau, and always know where the money goes and who gets it.

Elaine

Mortgage Servicing — Thou Shall’t Not Lie, Cheat or Steal

USA Today is reporting that Bank of America, as the purchaser of Countrywide, is paying $108 Million in penalty to the Federal Trade Commission (to be distributed amongst the effected parties).  The FTC discovered that Countrywide was charging excessive fees to home owners who were facing foreclosure.  These fees were for things like property inspections and landscaping (I assume that means mowing).  What Countrywide was doing was creating wholly owned subsidiaries to arrange for the services and then bill the accounts at an inflated price.

At the very bottom the article also mentions that Countrywide has been known to misrepresent the nature, and amounts due on loans, it looks like they may have discovered some false Bankruptcy claims and concealed fees.  This should be shocking.  It isn’t.  I sued Countrywide for its bankruptcy related accounting practices a few years ago.  What is more disturbing is that these practices, or variants on them, are widespread throughout the industry.

We don’t let debtors lie, cheat or steal in Bankruptcy.  It is high time we stopped letting creditors do it.

Elaine

Mortgage Lender of First Resort

I frequently need to know who actually owns the notes and mortgages connected with my clients’ homes.  So, keeping an eye on who the players are on the National mortgage scene makes a certain amount of sense.

Here is an article from BusinessWeek that makes me reconsider my decision not to subscribe.  I mean, seriously, at $2.49 a month delivered automatically to my Kindle while I sleep — why am I not?  However, I regress.

This article makes two very serious points.  First, FHA is now backing more mortgage loans than Fannie and Freddie combined.  Why?  Simple, lower down payment requirement.  Second, 90% of the current mortgage market is guaranteed by the U.S. Government by way of FHA, Fannie, Freddie (and to a much lesser extent VA and FHLBB).

I can see how this happened.  The takeover of Fannie and Freddie was a reaction to events rather than a carefully planned policy choice, and what to actually do with them is going to be a great big, hairy mess.  Then, there has been enough going on with regulatory changes and policy decisions that making changes to FHA policies would require affirmative political effort.  Not making them is the default.  So, by default the U.S. Government has become the backstop for effectively the entire home mortgage market.  This is an amazing policy decision to be made by accident.

Elaine

Reflections on a Webinar

Last week I taught a Webinar on the intersection of divorce law and bankruptcy law.  I have taught CLE before, and I have been recorded when teaching CLE before.  Last week, though, was the first time that I have taught a presentation where I was teaching solely to a camera.  Now, there were quite a few people watching live from their computers; and I received 5 or 6 questions by the end of the session.  I couldn’t see any of that, though.  All I could see was the big, blue eye on the camera.  The only other person in the room was the tech who was running the transmission feed and who wrote down the questions as they came in and walked them over to me.  I have to say it was an interesting experience, but not one that I am sure I want to do again.

First of all, I went through my material much faster than I expected.  I think that is a result of having no visual feedback.  I hadn’t realized how much I cue off of the expressions of the audience.  I started wondering afterwards just how fast I had to have been talking.  When I got questions, it was all at once at the end of the segment.  They were written in the Tech’s handwriting who brought them to me.  I had no idea when they were written, who wrote them and they had no facial expression or body language attached.  I’m not sure why that matters, but it does.

I’m all for virtual, and I am all for making things more accessible to people whenever and wherever they are.  I just think that the whole experience would have been better for all concerned if there had been a few real, live students in the room with me.

Oh, I said at the time that I would put the questions and answers up here; and I will — just as soon as I remember to take the questions home with me.

Elaine

Foreclosure Records

USA Today ran an article on foreclosure statistics. It seems that we have recently set two records.  The first is that for the first time ever 10% of all home owners (according to the article) missed a mortgage payment during a quarter.  The second is that now some 4.6% of all home owners are in foreclosure.  Gee, two records, one article.

What I find difficult to believe about this is that it says both of these percentages are of all home owners — not all home owners with mortgages.  I would believe those numbers if they are all home owners with mortgages, but considering the number of paid for properties around, it would be seriously staggering if those numbers are actually true.

Elaine