Understanding your insurance premiums?

Consumer Reports has a great story about how insurance companies set
rates.  The link is below and you do not have to have a subscription
to read it.


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Debt Settlement or Bankruptcy?

If anyone tells you that either debt settlement or bankruptcy is the better route without knowing the details of your situation, you should stop listening to them. They either don’t know what they are talking about or they are lying to you. There are benefits and detriments to both, which is the better alternative depends on your situation. Below are some things to keep in mind when deciding which path you want to pursue. This list is by no means exhaustive, but it should shed some light on the issue.


Negotiating a compromise on a debt can be pretty straight forward. You have leverage or you don’t. Common sources of leverage are the threat of bankruptcy, a valid legal defense (i.e. you don’t actually owe the money), and the time cost of money, i.e. $80 today is better than maybe getting a $100 next year. Without leverage to negotiate a settlement, don’t expect great results, particularly if you are employed and your wages are garnishable.

Avoid current delinquencies on your Credit Report

Various things kill a decent credit score. Delinquent debts, debts that are identified as settled or charged off are others, all of which do significant damage to one’s credit score. Often debts that are not current, but are being paid on, can be damaging because they show up as current debts not in good standing, when they are really old debts not in good standing but are getting better. Time is one of the great cures for a bad credit score. An old bankruptcy filing on one’s report will be better than a current delinquency on a credit report.


Employers can legally discriminate against you for having bad credit. The law forbids an employer from discriminating against you for filing bankruptcy, at least once you have a job. Though the bankruptcy law forbidding employer discrimination is somewhat unclear, Courts have generally held that the law just forbids discrimination against employees who have filed bankruptcy. Discrimination against a job applicant is probably legal.

Settlement Language

The devil is in the details of the settlement agreement. Though conceivably a settlement can afford you much more flexibility than bankruptcy, creditors are generally upset that they have not been paid, so one shouldn’t expect great flexibility from creditors unless one’s situation is unique.

Tax Implications

Forgiveness of debt is an accession to wealth as far as the tax code is concerned. This means that even if you settle your debts, you may end up with a significant tax liability. Tax liabilities are generally not dischargeable in bankruptcy. If you settle your debts you need to make certain that you will not be saddled with a non-dischargeable debt that you can’t afford.

Fighting the Credit Reporting Agencies

Having good credit generally matters to people. Credit Reports are routinely inaccurate. If you are able to clear up your financial situation, expect to have to sort out the status of your prior debts with the credit reporting agencies. In bankruptcy, you have a court order which makes things simple. In a settlement, you have a settlement agreement. If your credit matters to you, you need provisions in your settlement agreements that will protect you from adverse credit reporting from your creditors.

Sometimes creditors will refuse this. They may tell you that by law they have to report adverse items. This is not true. They have to report accurate information, but there is nothing that states they have to report the information.

Unforeseen Circumstances

In a Chapter 7 bankruptcy, there is no repayment plan. Occasionally, there are assets that need to be liquidated for the benefit of creditors. In a Chapter 13 bankruptcy, there is a plan. It lasts for three or five years depending on the facts of the case. Settlement works best when a single lump sum can be paid to satisfy the debt. In both a Chapter 13 and debt settlement, there are usually significant and damaging repercussions for missing a payment. It just depends on the circumstances of the case. If you have a change in circumstances in a Chapter 13, you may be able to get a modification in your plan.

If you are not sure whether to file bankruptcy or to try and settle your debts, don’t ignore the problem. If you need help, don’t engage an organization that is going to push you in one direction or the other. You don’t want to be spending money trying to settle your debts, when bankruptcy is the only realistic solution and you don’t want to be filing bankruptcy when you could settle your debts and not have to deal with the complications of filing bankruptcy. As your legal counsel, we can help you navigate through this situation, settle your debts for you or file bankruptcy for you.

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A lot of things on one’s credit report can keep one from being able to get credit or buy a house. Whether or not someone is going to extend credit to you is up to the prospective lender. Banks have their own guidelines they follow. Individuals and prospective sellers will generally be more flexible in extending credit. If you have a down payment and terrible credit, your best bet might be to buy a house where the seller is willing to do seller financing. This is not that difficult if you have a meaningful downpayment. See for example www.sellfinanced.com.

If you can’t find seller financing or private financing, it is still possible to buy a home with credit after filing bankruptcy. The easiest way is with an FHA loan. If otherwise eligible, it is possible to get an FHA loan while still in a Chapter 13 so long as your payments to the trustee have been on time and you can get permission from the Courts.
If you have filed Chapter 7, you can obtain a new FHA mortgage loan 2 years after discharge provided you have not included a home in the Bankruptcy. If you are not a first time home buyer and will be seeking conventional financing, you will probably have to wait three to four years due to the prior bankruptcy.

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Virginia’s Modest Rescission Rights

Certain states have very generous rescission rights. In other words, there are various situations and contracts where someone can enter into a written contract and then cancel or terminate the written contract in a certain amount of time and have no liability regardless of what the contract states. Most laws of this nature are state laws.

In Virginia, your rights of rescission are fairly limited. Here is a list of some of the more common rescission rights in Virginia that are specifically set forth by statute. This list does not address rescission rights that are based in the common law such as fraud, mutual mistake, or failure of purpose.
1. Timeshares – even days to cancel without penalty, 55-376
2. Condominiums – when purchasing from the developer, five days from the later of the date of the signed contract or the delivery of the then current public offering statement, 55-79.90 and 55-79.88
3. Condominiums – within three days after receiving the resale certificate or being notified that the resale certificate will not be available, 55-79.97
4. Condominiums – any time prior to settlement if not notified that the Condo is in fact a condo and you have a right to a resale certificate, 55-79.97
5. House in a home owner’s association – the Buyer may cancel the contract within three days after receiving the association disclosure packet or being notified that the association disclosure packet will not be available. 55-509.4 This period can be longer if the contract does not disclose certain required provisions.
6. Home Solicitation Sales – the buyer has the right to cancel a home solicitation sale until midnight of the third business day after the day on which the buyer signs an agreement or offer to purchase which complies with 59.1-21.4., 59.1-21.3
7. Health Clubs – three days from day of contracting or unable to use facility for 30 consecutive days, 59.1-297
8. Sale of goods – timely rejection of conforming goods subject to Seller’s right to cure, 8.2-508
9. Residential Home Financings – Under the Truth in Lending Act, a borrower may rescind any residential mortgage transaction until three days after the lender provides the disclosures that TILA requires, i.e. two copies of the TIL Disclosure and two copies of the Notice of Right to Rescind. If the lender provides the disclosures at the closing (as it should), the right to rescind is gone three days later, but if it doesn’t then the rescission period can continue for three years.

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Credit Reports often contain inaccuracies. These inaccuracies can be costly. Sometimes, the errors can be fixed by identifying them and notifying the Credit Reporting Agency of the inaccuracy. Often though, the Credit Reporting Agency will not make the correction.

Credit Reporting Agencies are obligated to take reasonable steps to investigate one’s credit report once notified of the inaccuracy by the consumer. They are also required to have reasonable procedures in place to do so. The Fair Credit Reporting Act provides individuals with a private cause of action to enforce these rights. The Fair Credit Reporting Act does not provide a private cause of action for reporting an inaccurate entry on a credit report.

An inaccurate entry may give rise to a common law defamation claim in egregious cases. Credit reporting agencies report the information they get from furnishers. A furnisher can be just about anyone. It can be a credit card company, a debt collector, a bank, etc. Often furnishers are not the original creditor. Both the furnisher and the credit reporting agency need to take reasonable steps to investigate disputes once notified by a consumer of a dispute.

It is the reasonableness required of furnishers and credit reporting agencies that is at the heart of private causes of action against furnishers and credit reporting agencies. In this regard, the Fair Credit Reporting Act “FCRA” is quite consumer friendly conceivably providing damages to an aggrieved consumer of actual damages, statutory damages, costs and attorney’s fees. What though is a reasonable investigation or a reasonable investigation procedure?

Basically this is going to depend on the circumstances of one’s case. In some instances the credit reporting agency and the furnishers may be able to get away with very minimal investigation. A very broad and unspecific complaint might not even merit a response from the furnisher’s or credit reporting agency. A lot of the form letters that credit repair companies send out fall into this category.

To obtain a thorough investigation a consumer can take various steps. Ideally a complaining consumer should:

1. Send the letter himself, return receipt, both to the furnisher and the credit reporting agency. An attorney can do this but it is probably best for the consumer to do so himself. 15 U.S.C. § 1681i makes reference only to disputes made by the consumer, not his agents, employees, attorneys or any other third party on his behalf. The Federal Trade Commission interprets this provision strictly.

2. Suggest investigation procedures that should be taken, for example, if you were an authorized user on a card but not the cardholder, then you should request that the furnisher look at the credit card application.

3. Point out inconsistencies to both the furnisher and the credit reporting agency. There may be inconsistencies on a credit report or with some document or information being provided by a third party. Provide such information if you have it, e.g. a bankruptcy petition or a court order dismissing a suit in which you were a defendant.

4. Cite independent problems with the information being provided by the furnisher. For example, if there is bad blood between a furnisher and the consumer, the consumer should explain this to the credit reporting agency. The purpose of this is to raise the credit reporting agency’s suspicions regarding the validity of the information being provided by the credit reporting agency.

5. If the dispute is more legal than factual in nature, the focus of this argument needs to be with the furnisher.

If you can’t sort out a dispute with the furnisher you should be able to get them to notify the credit reporting agencies of the dispute. They are required to do this per 15 USC § 1681s-2(a)(1)(3) and 15 USC § 1681c(f). A lawyer can guide you through this process, but generally the initial efforts to get one’s credit report fixed should be done by the actual consumer.

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Virginia’s Consumer Protection Act Strengthened by Recent Supreme Court Decision

The Supreme Court of Virginia recently found that a plaintiff bringing an action under Virginia’s Consumer Protection Act (VCPA”) need only prove his case by a preponderance of the evidence and not the higher burden of proof of common law fraud, clear and convincing evidence. See Ballagh v. Fauber Enterprises Inc.

The VCPA promotes fair and ethical standards of dealings between businesses and the consuming public. The Virginia General Assembly enacted the VCPA to protect consumers from fraudulent business practices by suppliers of goods and services. Though one is not likely to ever be able to get punitive damages under the VCPA , it does provide aggrieved consumers viable relief in several ways. See Wilkins v. Peninsula Motor Cars, Inc., 266 Va 558. The VCPA does not preclude punitive damages if you can also prove common law fraud.

First, willful violations entitle a consumer to treble damages and at a minimum $500, even when their actual damages are less (Va Code Sec 59.1-204(A)); second, a plaintiff can get attorney’s fees under it (Va Code Sec59.1-204(B)) and; third, there is a cure offer provision (Va Code Sec 59.1-204). The cure offer provision makes a lot of sense. It is defendant friendly insofar that it permits a defendant to settle quickly and on reasonable terms. The cure offer must be delivered before the defendant files its initial response to any pleading filed by the consumer. The cure offer is supposed to be something that is reasonably calculated to remedy the “loss” claimed by the consumer. It must include a minimum additional amount equaling 10 percent of the value of the cure offer or $500, whichever is greater, as compensation for inconvenience, any attorney’s or other fees, expenses, or other costs of any kind that such person may incur in relation to such loss; provided, however that the minimum additional amount need not exceed $4,000. VA Code Sec. 59.1-198(5). If the offer is accepted, it extinguishes any other claim based on the facts alleged in the initial action filed by the consumer. If the actual damages recovered by the consumer at trial do not exceed the cure offer, no attorney fees incurred after the delivery of the cure offer may be recovered.

Per 59.1-200 of the Code of Virginia, the following acts are actionable under the VCPA:

1. Misrepresenting goods or services as those of another;

2. Misrepresenting the source, sponsorship, approval, or certification of goods or services;

3. Misrepresenting the affiliation, connection, or association of the supplier, or of the goods or services, with another;

4. Misrepresenting geographic origin in connection with goods or services;

5. Misrepresenting that goods or services have certain quantities, characteristics, ingredients, uses, or benefits; (opinions are not actionable)

6. Misrepresenting that goods or services are of a particular standard, quality, grade, style, or model;

7. Advertising or offering for sale goods that are used, secondhand, repossessed, defective, blemished, deteriorated, or reconditioned, or that are “seconds,” irregulars, imperfects, or “not first class,” without clearly and unequivocally indicating in the advertisement or offer for sale that the goods are used, secondhand, repossessed, defective, blemished, deteriorated, reconditioned, or are “seconds,” irregulars, imperfects or “not first class”;

8. Advertising goods or services with intent not to sell them as advertised, or with intent not to sell at the price or upon the terms advertised. In any action brought under this subdivision, the refusal by any person, or any employee, agent, or servant thereof, to sell any goods or services advertised or offered for sale at the price or upon the terms advertised or offered, shall be prima facie evidence of a violation of this subdivision. This paragraph shall not apply when it is clearly and conspicuously stated in the advertisement or offer by which such goods or services are advertised or offered for sale, that the supplier or offeror has a limited quantity or amount of such goods or services for sale, and the supplier or offeror at the time of such advertisement or offer did in fact have or reasonably expected to have at least such quantity or amount for sale;

9. Making false or misleading statements of fact concerning the reasons for, existence of, or amounts of price reductions;

10. Misrepresenting that repairs, alterations, modifications, or services have been performed or parts installed;

11. Misrepresenting by the use of any written or documentary material that appears to be an invoice or bill for merchandise or services previously ordered;

12. Notwithstanding any other provision of law, using in any manner the words “wholesale,” “wholesaler,” “factory,” or “manufacturer” in the supplier’s name, or to describe the nature of the supplier’s business, unless the supplier is actually engaged primarily in selling at wholesale or in manufacturing the goods or services advertised or offered for sale;

13. Using in any contract or lease any liquidated damage clause, penalty clause, or waiver of defense, or attempting to collect any liquidated damages or penalties under any clause, waiver, damages, or penalties that are void or unenforceable under any otherwise applicable laws of the Commonwealth, or under federal statutes or regulations;

14. Using any other deception, fraud, false pretense, false promise, or misrepresentation in connection with a consumer transaction;

15. Violating any provision of § 3.2-6512, 3.2-6513, or 3.2-6516, relating to the sale of certain animals by pet dealers which is described in such sections, is a violation of this chapter;

16. Failing to disclose all conditions, charges, or fees relating to: a. The return of goods for refund, exchange, or credit. Such disclosure shall be by means of a sign attached to the goods, or placed in a conspicuous public area of the premises of the supplier, so as to be readily noticeable and readable by the person obtaining the goods from the supplier. If the supplier does not permit a refund, exchange, or credit for return, he shall so state on a similar sign. The provisions of this subdivision shall not apply to any retail merchant who has a policy of providing, for a period of not less than 20 days after date of purchase, a cash refund or credit to the purchaser’s credit card account for the return of defective, unused, or undamaged merchandise upon presentation of proof of purchase. In the case of merchandise paid for by check, the purchase shall be treated as a cash purchase and any refund may be delayed for a period of 10 banking days to allow for the check to clear. This subdivision does not apply to sale merchandise that is obviously distressed, out of date, post season, or otherwise reduced for clearance; nor does this subdivision apply to special order purchases where the purchaser has requested the supplier to order merchandise of a specific or unusual size, color, or brand not ordinarily carried in the store or the store’s catalog; nor shall this subdivision apply in connection with a transaction for the sale or lease of motor vehicles, farm tractors, or motorcycles as defined in § 46.2-100; b. A layaway agreement. Such disclosure shall be furnished to the consumer (i) in writing at the time of the layaway agreement, or (ii) by means of a sign placed in a conspicuous public area of the premises of the supplier, so as to be readily noticeable and readable by the consumer, or (iii) on the bill of sale. Disclosure shall include the conditions, charges, or fees in the event that a consumer breaches the agreement; 16a. Failing to provide written notice to a consumer of an existing open-end credit balance in excess of $5 (i) on an account maintained by the supplier and (ii) resulting from such consumer’s overpayment on such account. Suppliers shall give consumers written notice of such credit balances within 60 days of receiving overpayments. If the credit balance information is incorporated into statements of account furnished consumers by suppliers within such 60-day period, no separate or additional notice is required;

17. If a supplier enters into a written agreement with a consumer to resolve a dispute that arises in connection with a consumer transaction, failing to adhere to the terms and conditions of such an agreement;

18. Violating any provision of the Virginia Health Club Act, Chapter 24 (§ 59.1-294 et seq.) of this title;

19. Violating any provision of the Virginia Home Solicitation Sales Act, Chapter 2.1 (§ 59.1-21.1 et seq.) of this title;

20. Violating any provision of the Automobile Repair Facilities Act, Chapter 17.1 (§ 59.1-207.1 et seq.) of this title;

21. Violating any provision of the Virginia Lease-Purchase Agreement Act, Chapter 17.4 (§ 59.1-207.17 et seq.) of this title;

22. Violating any provision of the Prizes and Gifts Act, Chapter 31 (§ 59.1-415 et seq.) of this title;

23. Violating any provision of the Virginia Public Telephone Information Act, Chapter 32 (§ 59.1-424 et seq.) of this title;

24. Violating any provision of § 54.1-1505;

25. Violating any provision of the Motor Vehicle Manufacturers’ Warranty Adjustment Act, Chapter 17.6 (§ 59.1-207.34 et seq.) of this title;

26. Violating any provision of § 3.2-5627, relating to the pricing of merchandise;

27. Violating any provision of the Pay-Per-Call Services Act, Chapter 33 (§ 59.1-429 et seq.) of this title;

28. Violating any provision of the Extended Service Contract Act, Chapter 34 (§ 59.1-435 et seq.) of this title;

29. Violating any provision of the Virginia Membership Camping Act, Chapter 25 (§ 59.1-311 et seq.) of this title;

30. Violating any provision of the Comparison Price Advertising Act, Chapter 17.7 (§ 59.1-207.40 et seq.) of this title;

31. Violating any provision of the Virginia Travel Club Act, Chapter 36 (§ 59.1-445 et seq.) of this title;

32. Violating any provision of §§ 46.2-1231 and 46.2-1233.1;

33. Violating any provision of Chapter 40 (§ 54.1-4000 et seq.) of Title 54.1;

34. Violating any provision of Chapter 10.1 (§ 58.1-1031 et seq.) of Title 58.1;

35. Using the consumer’s social security number as the consumer’s account number with the supplier, if the consumer has requested in writing that the supplier use an alternate number not associated with the consumer’s social security number;

36. Violating any provision of Chapter 18 (§ 6.2-1800 et seq.) of Title 6.2;

37. Violating any provision of § 8.01-40.2;

38. Violating any provision of Article 7 (§ 32.1-212 et seq.) of Chapter 6 of Title 32.1;

39. Violating any provision of Chapter 34.1 (§ 59.1-441.1 et seq.) of this title;

40. Violating any provision of Chapter 20 (§ 6.2-2000 et seq.) of Title 6.2;

41. Violating any provision of the Virginia Post-Disaster Anti-Price Gouging Act, Chapter 46 (§ 59.1-525 et seq.) of this title;

42. Violating any provision of Chapter 47 (§ 59.1-530 et seq.) of this title;

43. Violating any provision of § 59.1-443.2;

44. Violating any provision of Chapter 48 (§ 59.1-533 et seq.) of this title;

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FCRA Restricitons on Defamation

The Fair Credit Reporting Act, specifically disallows certain private causes of action as a means of enforcing its own provisions. For example, it does not allow a private cause of action against a furnisher when, a furnisher furnishes information to a credit reporting agency when the information is incorrect, when a furnisher fails to correct information it knows is incorrect, or even for failing to conduct a reasonable investigation in response to a consumer who has directly disputed a debt with a furnisher but not with the credit reporting agency.

Besides the Fair Credit Reporting Act though, a Virginia consumer also has available to him his common law tort claims. Once claim relevant in credit reporting cases is a defamation claim. The Fair Credit Reporting Act has what has been referred to as qualified immunity for a furnisher of information to a credit reporting agency. 15 U.S.C. 1681h(e) states that “… no consumer may bring any action…in the nature of defamation… based in whole or in part on the report, except as to false information furnished with malice or willful intent to injure such consumer.”

One has a valid claim against a furnisher for defamation then if the furnisher publishes or furnishes false information to a credit reporting agency with gross indifference and recklessness so as to amount to a wanton disregard for the rights of the consumer. So, what does this mean? If you can show that you provided the evidence to the furnisher for the furnisher to know it was providing incorrect information and it did nothing then you will have a workaround to 15 U.S.C. 1681h(e).

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