A fine balance exists between consumer laws which the government believes protect consumers from scams and interfering with the free market and access to justice. Credit repair organizations which take money in advance can perform a valuable service to help consumers get refinancing but many unscrupulous credit repair outfits simply charge a large fee in advance and then deliver little or no service. Federal law and many state laws forbid credit repair outfits to take money in advance but exempt lawyers. Our firm has prosecuted and defended class actions and Attorney General actions involving credit repair outfits who take money in advance.
Due to so many credit repair scams in that state for mortgage foreclosure modification services California passed a law forbidding lawyers for taking money in advance for foreclosure services, the New York Times reports.
The article states:
“Consumers just don’t know what is going on,” said Walter Hackett, a former banker who is now a lawyer for a nonprofit service in Riverside. “They get a piece of paper saying they are going to lose their homes and they freak out.”
The problem for lawyers is that even a simple modification, in which the loan is restructured so the borrower can afford the monthly payments, is a marathon, putting off their payday for months if not years. If the bank refuses to come to terms, the client may file for bankruptcy. Then the lawyer will never be paid.
Alice M. Graham, a lawyer in Marina del Rey, said a homeowner in default recently tried to hire her. When Ms. Graham declined, the despairing owner begged her in vain to accept payments under the table.
“The banks have all the lawyers they want, and the consumers are helpless,” Ms. Graham said.
To read the full article click here.
Our Chicago business litigation lawyers have defended credit repair organizations in defending class actions and Attorney General actions brought against credit repair organizations who accept money in advance for such services.
Lubin Austermuehle is a full-service litigation and business law firm based in the Chicagoland area that focuses on handling all of the legal issues confronting businesses in today’s world. We represent plaintiffs and defendants, LLC’s and corporations, and we have experience representing clients in matters ranging from shareholder disputes to breach of contract claims. Our Chicago business attorneys have more than twenty-five years of experience in business litigation and have won favorable verdicts in “bet the business” lawsuits. Lubin Austermuehle has Chicago and Schaumburg business litigation lawyers who can identify and understand the legal issues in a dispute, no matter how complex they may be. We will use our resources and knowledge to formulate a plan of action that will help further your interests, resolve your problems, and get you back to growing your business. If your business is being sued or you are seeking preventative legal advice, call Lubin Austermuehle now. For a consultation, call 630-333-0333 or send us an email through our website.