Suggested legal reforms for the Occupy movement’s platform…

Members of the Occupy movement,

Our firm has been aggressively pursuing banks and collection companies in the courtroom for years. We have returned millions to hard working individuals exploited by corrupt banks and a broken credit system. We have repeatedly proven banks and collectors have knowingly and willfully broken laws after calculating the cost of compliance to be higher than the cost of noncompliance. In doing so, we have forced huge settlements and won massive judgments. Still we face an uphill battle. We highlight several areas that current law fails consumers. Such areas require addressing with the political process:

1) Arbitration agreements – Almost every interaction with a bank or large company is contractual. Banks and large companies will slip an arbitration clause into almost all contracts. An arbitration clause waives an individual’s right to sue for damages resulting from the individual’s interactions with the bank or company. The same clause will often state that bank or company retains all rights to sue the individual. This means that when individual has a problem with a good or service purchased from a bank or large company the individual must arbitrate their claim, when the bank or company has a problem with the individual the bank or company can sue the individual. They can sue you, but you can’t sue them! Worst of all courts have held that these clauses are fully enforceable. Moreover, current contract law prevents the individuals from lining out such clauses in an effort to avoid them.

2) Failure to discharge student loans in bankruptcy- the fed rate for money right now is close to 0%. CD rates are less than 1% on average. Meanwhile student loan rates on Stafford loans secured by the federal government is 8.5%. How would you like to buy a 8.5% CD secured by the federal government? Most American’s would. The only problem is that the federal government wont sell you these products (they are reserved exclusively for the large banks.) These student loans are sold by to young uneducated individuals who are often not informed that there is no way to get rid of this debt. Yep that’s right, there is a carve out in bankruptcy law that states these loans are not dischargeable in bankruptcy absent extraordinary circumstances. Court have held that being out of work for years, underemployed, heck even a disabled veteran does not fulfill the criteria for discharge. In a final absurdity, we are told by the United States Department of Education that an individual is stupid for not getting a formalized education and enslaving themselves with this debt.

3) Summary Judgment – last year there were only 4 states that had more than 200 federal jury trials! We know consumers and citizens are upset and we know people are suing (consumer litigation is up 400% in some areas over the last 5 years), so where are the trials? The answer is that “busy” federal courts are fining creative ways to dismiss cases. Most often this is taking place under a little known court rule called summary judgment and/or 12(b)6 motions to dismiss. Under this rule a judge can dismiss a case before a jury has an opportunity to hear the case. In order to fulfill the requirements for dismissal there cannot be any issue of fact. However, we are seeing judges evaluating facts and making determinations of fact traditionally reserved for juries. After evaluating conflicting facts and determining which facts are correct the judge will then state there are no issues of fact and dismiss the case. For example, our firm recently lost such a motion in Minnesota against a debt buyer. The debt buyer submitted an affidavit that a letter was mailed. Our client submitted a affidavit that he never received any such letter, and thus that he did not believe that any such letter was sent. The judge ruled that a letter was indeed sent and, thus, that there was no issue of fact. See Carpenter v. RJM.

4) Some final areas that individuals familiar with consumer law will be aware of: Failure of judges to require affidavits of sale in debt collection cases; pocket service; simplified default judgment processes for contract claims.

Dave represents clients in Minnesota on a range of legal issues, including civil litigation, business ventures, and creditor relations. He also has expertise raising capital to finance David v. Goliath cases. (Yes, pun intended!) Dave can be reached via email at dmadgett@madgettlaw.com

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