Sneaky Credit Companies & Their Rediculous Interest Rates

NEW YORK (CNNMoney) — Interest rates are now hovering near record highs, at an average rate of 14.72%. And if your credit is bad enough, you could even end up with a rate as high as 59.9% APR.

That’s because while the CARD Act helped crack down on certain fees and requires more disclosures, it didn’t cap every credit card holder’s worst enemy: interest rates . . . .

“Rates are going up because card issuers know that once you get a card they can’t raise the rates, so they’re raising rates on the front end to ensure they get the revenue from that interest,” said Beverly Harzog, credit card expert at Credit.com.

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Solo versus The Firm

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Why roll with a solo practitioner as opposed to a law firm?

When I began my practice I asked myself this very thing.  At first, I was skeptical that I could provide the same, if not better, representation than a law firm housing several paralegals, secretaries, and attorneys.  But after speaking with several clients who either had previously retained a firm, or had friends and colleagues who were represented by law firms, I quickly realized that solos can surpass what law firms do.  In fact, John Adams was a solo practitioner, proof that a solo lawyer can be a wonderful thing. Here’s how and why:

The “reputation squared” phenomenon

As  a solo my reputation is everything. It has a direct affect on my practice; if my reputation suffers so does my practice. I am very conscious of this fact and therefore go to great lengths to maintain a strong relationship with potential, current, and former clients.  I return phone calls promptly, speak directly with clients about their legal issues, and often meet with clients on the weekends to accommodate their work schedules.

Granted, a law firm’s reputation is also partially based on the performance of its lawyers, but a negative mark on one of the firm’s lawyers does not have such a drastic affect on the firm’s reputation.  The responsibility is spread around.

Furthermore, many of the associate attorneys are simply not emotionally and professionally invested in their respective firms.  If they screw up or mistreat a client, they may suffer some blow back from the firm but nothing substantial (except perhaps losing their job).  If a solo screws up or mistreats a client, the ramifications are far greater.

Accountability

Because firms are able to spread the responsibility, so too can they spread the work load.  Consequently, lawyers can minimize their contact with clients by having their paralegals act as the point of contact.  Solos are often hands on, engaging directly with clients both by telephone and email.  Although many solos have their own support staff, because of the “reputation” and “accountability” phenomenon, solos are far more willing to engage with clients directly.

You know who your lawyer will be

When you walk into a law firm setting, it’s never quite clear who will be representing you.  Also, like any other business, law firms experience turn-over in their attorneys.  Lawyer 1 may have been initially assigned to your case, but after a few months he left the firm and now your case has been assigned to Lawyer 2.  When you walk into a solo’s office, you know exactly who your lawyer will be and odds are very good that solo will remain your lawyer until the close of the case (unless one of the parties withdraws).

Flexibility and innovation

Solos tend to be more flexible and innovative in their operations and marketing.  Why?  Survival.  Solos have less resources (manpower) than law firms, so solos are constantly seeking ways to make their practice more efficient and marketable to potential clients.

As an example of a solo’s flexibility, I am currently in the middle of transitioning my accounting/billing system into something more efficient.  I can do this because my practice is not burdened with the same sort of institutionalization that law firms are burdened with; I do not need to change the software to numerous employee computers or re-train an entire staff.

Additionally, I offer unique services to entice clients to retain me rather than some boutique to medium sized law firm.  An example is my utilization of DropBox, where clients have the option to access electronic documents associated with their file online.

I’m not saying all law firms aren’t worth the money they charge.  There are many fantastic firms with fantastic lawyers.  I am also not saying that all solos are fantastic lawyers.  Just as there are terrible law firms, so too are there terrible solo attorneys.  I’m simply highlighting some of the reasons why you may want to think about retaining a solo practitioner instead of going the traditional route and retaining a law firm.

Remember, John Adams was a solo attorney….

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Tim Sutherland is a Washington state attorney practicing in the areas of debt relief, consumer protection, and small business representation. Visit his website at www.TimSutherlandLaw.com

The Repo Man Visits A Car Lot Near You

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Repossession in Washington state is primarily governed by RCW 62A.9A et al.  The repossession laws are primarily contract actions governed the state’s UCC (uniform commercial code).  However, when asserting a wrongful repossession claim, the common law of torts (a civil wrong committed by one party against another) may also apply.  Examples of common law tort actions relating to wrongful repossession claims include conversion or trespass to chattel.

Security Interests

Repossession of a car is conducted by the creditor that holds a security interest in the car.  What is a security interest?  When you buy a car and don’t pay in cash you need to receive a loan to purchase that car.  Oftentimes, buyers receive this loan from the car dealer or a lender that the dealer works through.  However, these loans are what we call “secured loans.”

A secured loan is a cash loan made by a creditor, who, to protect their investment, assumes a property interest in your car.  We call this “collateral,” meaning that if you breach the terms of the contract (fail to make timely payment), the creditor can assert his property interest in the car and repossess it.  Once repossessed, the creditor can resell the car to pay off whatever remains of the loan.  If a deficiency still exists after the car has been sold, the creditor can come after you for the remaining balance.

For example, say you sell your used car to a neighbor for $5,000, but your neighbor does not have the $5,000 to immediately give you.  You agree to give the neighbor the car before you have the full $5,000 in hand.  Title is transferred to the neighbor, who now becomes the rightful owner of the car.  But, to protect your investment (you can’t just give up a $5,000 piece of property without some sort of security right?) you ask for some sort of collateral.  That way, if the $5,000 is never paid, you have legal recourse to collect on the $5,000.  This collateral can be anything equaling the value of the loan: a flat screen television, boat, et cetera.

Instead, like most car dealers, the neighbor puts the $5,000 car up as collateral.  Thus, although the car now belongs to the neighbor, you retain a property interest in the car, permitting you the right to repossess the car if any of agreed upon terms are violated.

The repo process in Washington

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Wages Being Garnished? Not Sure How You Got To This Point?

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I get calls weekly from potential clients distressed over the recent garnishment of their wages.  In these troubled and difficult times many of these clients are already on tight budgets.  Now, they’re losing an additional 25% of their bi-weekly paychecks to ruthless creditors who haven’t taken the time or day to warn or prepare these debtors for garnishment.  “What can I do?” They ask me.

Below is a copy of a typical set of documents served on an employer and debtor defendant for garnishment of wages:

How the process begins

The garnishment of wages in Washington State is governed by chapter 6.27 of the Revised Code of Washington.  The process begins with a lawsuit, in the form of two legal devices called a summons & complaint, served on you or a person of suitable age at your place of domicile.  The summons & complaint informs you that you have been sued by a creditor to collect an alleged debt.

In Washington, once you are personally served, you only have 20 days to answer a complaint.  Answering the complaint means you file a legal document with the court either affirming or denying the allegations put forth in the complaint.  You must also file a Notice of Appearance with the court, which essentially tells the court that you will be an active participant in the case.

In most cases, people served with a lawsuit freeze up and ignore the lawsuit altogether.  In most cases this is a very bad idea.  Why?  Because after 20 days of ignoring a lawsuit and not filing the appropriate legal documents the court considers you in default.

Default judgments

Once you are in default (failing to respond within the time allotted) the creditor can motion the court for a default order.  Once the order is signed by the judge, the creditor can seek a judgment against you for the money owed plus attorney fees and other costs associated with the suit.  Once a judgment is rendered, it is much more difficult to avoid paying the alleged debt.

Barring some gross procedural error, such as imperfect service or lack of jurisdiction, it is highly unlikely a court will set aside a judgment.  That is why it is imperative that you see a debtor lawyer right away as soon as you’ve received a summons & complaint.

Once a default judgment is entered, the creditor can begin pursuing collection of the debt.  Sometimes creditors place a lien on your personal property or assets, but the easier route is to simply garnish your wages (also known as a “continuing lien of earnings”).

Wage garnishment

Creditors can garnish up to 25% of your paycheck towards repayment of the judgment.  Remember, the judgment amount will typically be more than the original debt.  The judgment amount usually involves 1) the original debt amount plus interest; 2) attorney fees; 3) court costs (such as filing fees; and 4) interest on the judgment itself, which will accrue for as long as the judgment amount is outstanding.

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DropBox – Backing Up Your Hard Drive Has Never Been Easier

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Keep forgetting to backup your hard drive?  Worried about someone stealing your computer and along with it your entire virtual office?  Or, are you simply worried about waking up one morning and finding your computer no longer works?

DropBox is my solution to this problem — and it does so much more.  This easy to use, initially free software program allows me to back up my files in The Cloud on a secure, password protected online platform.

The free version allows up to 2 GB of storage space — plenty of space for those of us who are mainly backing up word documents, .pdf documents, and excel sheets.  You can also acquire additional storage space for free if you recommend a friend to use and signs up with DropBox.

DropBox works as follows:  you download the dropbox program, which is effectively a dropbox folder; very similar to the file folders you would find on any windows machine.  Anything you place in this folder automatically syncs up with DropBox and in effect, is uploaded and saved to DropBox’s servers.

I would recommend copying your files from your hard drive and pasting them into your DropBox folder.  Cutting and pasting the file will take the file off your hard drive, defeating the purpose of using DropBox as a backup!

Also, creating a shortcut of a folder and placing it in DropBox saves you from manually backing up my files in DropBox.  But beware: any modifications you make to a document in a shortcut folder in DropBox will automatically modify the same document on your hard drive and vise versa.

Because your information is stored in your DropBox folder, you can access this information from anywhere and from any computer.  All you need is DropBox installed on the computer or device you are using.  I find this feature rather helpful for accessing documents in court on my handy dandy iPhone (DropBox has a free app that you can password protect).

But DropBox can do more.  As a lawyer, I am always trying to find ways to better serve my clients.  DropBox is one way I do this.  I provide my clients with the option to have their case file available inside my DropBox master folder so that they can check in on their case and see any critical components of their file without having to spend time driving to my office or having it emailed to them (wow, that’s quite a sentence).

All I do is set up a new password protected file inside my DropBox master folder and send my clients an invite with the password.  They have access to their file, but not to anything else in my master DropBox folder.  This way, I can provide a unique service to my clients while at the same time using DropBox for my own administrative purposes.

DropBox is fast, easy, and secure.  What more could you want?  Don’t answer that!

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Tim Sutherland is a Washington state attorney practicing in the areas of debt relief, bankruptcy, consumer protection, and small business representation. Visit his website at www.TimSutherlandLaw.com

At Risk of Being Sued To Collect A Credit Card Debt

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Most of us have credit cards.  Without a credit card, building reliable credit is made more difficult.  Credit cards can be useful in paying for things that can be paid off at the end of the monthly billing cycle.

But what if you lose your job? Or you (or a family member) suffer a medical emergency that forces you to dip into a meager savings account?  Suddenly that credit card becomes your conduit to survival, paying for anything from groceries, to rent, to utilities.  It doesn’t take long to put yourself in a hole; the likes of which is very difficult to climb out of.

Credit card companies have made it an art form to suck people in and squeeze every penny they can out of them.  Oftentimes, they can squeeze 10x more out of you (if not more) than you ever borrowed.  What’s worse, after you’ve decided you’ve had enough and refuse to pay any more, the begin to harass you endlessly with phone calls, letters, and emails demanding continued payment.  Finally, they slap you with a lawsuit claiming an “unpaid debt.”

The Fair Debt Collections Practices Act

Enough is enough.  There are things you can do to fight back.  The feds recently implemented a law called the Fair Debt Collections Practices Act (FDCPA), which regulates creditor conduct.

For example, it limits the hours they can call you, and prohibits creditors from calling friends, family, or co-workers and telling them you owe money.  Additionally, it prohibits a creditor from calling you at work after you’ve told them not to.  Violation of the FDCPA carries with it a statutory award of $1,000 per violation, plus attorney fees and court costs.

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Filing For Bankruptcy & The Hidden Consequences

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Filing for bankruptcy may be the best solution for solving your financial woes.  Contrary to popular belief, after bankruptcy most people experience resurgence in their credit rating.  Suddenly they can acquire loans (albeit at the highest interest rates) and can put money into their savings accounts.  However, if your case is not handled correctly, you may suffer some unforeseen and unexpected consequences from your bankruptcy.

Have you seen any of those bankruptcy agencies advertising that they can handle your bankruptcy for only $600 (including the filing fee)?  There’s a reason they charge so little.

First, they probably wont examine your case to determine if you even need to file for bankruptcy.  They’ll simply file your case and be done with it.  For some people, negotiating with the lender or fighting a lawsuit brought by a creditor may be their best option.  Or, as weird as this may sound, doing absolutely nothing at all about your debts may be the best solution.

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Uniformed Services Employment & Reemployment Rights Act

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Veterans, active military personnel, and reservists, click the link below for a helpful one page flyer of your rights under the federal USERRA.

USERRA (pdf)

Tim Sutherland is a Washington state attorney practicing in the areas of debt relief, bankruptcy, consumer protection, and small business representation. Visit his website at www.TimSutherlandLaw.com

EchoSign – Mainstreaming The Signature Process

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Echosign is a brilliant service that is useful for small businesses and lawyers.  No longer will it take a week or more to get essential documents signed.  The most difficult thing about a business transaction is sealing the deal.  This service ensures you can do it quickly and without much effort at all.

The service is initially free, allowing you to test it out to see how you like it.  Unfortunately, you can only send five documents a month utilizing the free service, but you can always upgrade.  Unlimited usage begins at $15/month; not too steep a price to ensure fluidity and efficiency.

The service is easy to use and quick to set up.  Here’s a step by step illustration.  After setting up an account, you’ll be presented with a screen showing you how many signatures you have remaining for the month, how many you have used, and a tool bar for adding documents to your account’s library.  This option is helpful for those of us who consistently send the same documents to new clients or customers.  In case you do not have a sufficient backup system in place, you can also archive your documents on your EchoSign account (I don’t; I utilize DropBox - See my post on DropBox here).

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Did The Credit CARD Act Cast The Devil Back Into Hell?

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The Devil is in the details.

Debt.  We’ve all taken the fall at some point in our lives.  Whether its credit cards, mortgages, car loans, or even student loans — we’ve signed on the dotted line . . . signed a pact with the devil.

Look, I’m not some idealistic populist.  By and large, I’m a proponent of the free market system; an instant cynic of anything that smells of government regulation.  That’s not to say that all government regulations are bad.  I disagree with many hardcore libertarians who suggest that the free market be left entirely to its own devices; free from governmental interference and control (laissez-faire).  One simply needs to look to the era of industrialization and big railroads to understand my point.  But anytime the government meddles in the affairs of the private sector, I’m highly suspicious and skeptical of its intentions.  Well, when President Obama signed The Credit CARD Act of 2009 into law (“The Act”), I was no less skeptical and no less suspicious of its ability to cure predatory lending practices.

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