In common lexicon, the understanding and usage of ‘fraud’ is exceptionally broad. Most fundamentally, ‘fraud’ is an intentional deception. This is pretty simple. Under Virginia law though, fraud is anything but simple. Proving common law fraud is particularly difficult. Though there are sometimes ways around these issues, here are a few of the common obstacles.

1. If you’ve contracted with the person you think has defrauded you, you probably don’t have a fraud claim. Virginia recognizes something called the economic loss rule. The economic loss rule is intended to maintain the difference between a cause of action sounding in tort and cause of action sounding in contract. It provides that where the plaintiff is a party to a contract and has suffered only economic loss, such as damages for inadequate value, the cost to repair a defective product, or lost profits, his remedy sounds in contract and not tort.

2. Contracts also have merger provisions typically, so if you enter into a contract based off of a misrepresentation, the misrepresentation will need to be very clear. Otherwise, the purported wrongdoer is going to say the misrepresentation is not a basis of the bargain, i.e. you waived it when you went and signed the contract.

3. Representations with regards to future acts are probably not going to be fraud because Courts generally do not consider such representations as relating to ‘material facts.’

4. Fraud needs to be pled with particularity. This means you are going to need more detail about the offense than is standard in a civil case.

5. Fraud needs to be proven with clear and convincing evidence. This is not as high of a standard as “beyond a reasonable doubt” but it is higher than “preponderance of the evidence” which is the typical standard in a civil case.

6. You need to prove someone’s intent. People rarely disclose why they are actually doing something.

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Credit scores are a bit like black boxes. There is not a single credit score. The FICO score is the most well known, but the algorithm is not public. Accordingly, the tips and suggestions that follow are general, but if followed, should help improve your credit score.

  1. Understand your credit reports, particularly the big three, TransUnion, Experian and Equifax. If an investigative consumer report is causing you problems, you need to see that report and understand that report. By understanding a report, you need to understand everything on it. Once you do so, you need to address all inaccuracies with the agencies to get them removed, explained or supplemented. Sometimes missing information can be damaging. If you have a credit card with a $2,000 balance on it and a $10,000 credit line, but the Credit Reporting Agency (“CRA”) is only reporting a $2,000 credit line, this is hurting your score. You are appearing over extended.
  2. Keep low balances on your accounts. Generally 10% to 15% is ideal. Anything above 50% is probably hurting your score.
  3. Don’t use a credit repair organization. Do it yourself or use an attorney. There is a reason why Congress passed the Credit Repair Organization Act and Virginia has the Virginia Credit Services Business Act. The industry has lots of problems.
  4. If you settle debts with a creditor have the creditor stop reporting the debt to the CRA’s. If there is a judgment against you, have the judgment creditor vacate the judgment in return for paying off the judgment or a portion of it.
  5. Paying on delinquent debts can actually hurt one’s score by making the debt appear more recent.
  6. Get rid of delinquencies. Bring accounts current.
  7. Keep in mind that the two most important things affecting your credit score are probably your payment history and the amount of credit that you are actually utilizing. If you are overextended, i.e. you are borrowing a lot relative to what you are allowed to borrow, this hurts you. Don’t borrow maximum amounts extended to you.
  8. A single 30 day late payment can drop a FICO score by as much as 100 points. This is the difference between having excellent credit and having average credit.
  9. If you are looking for good interest rates, do your shopping in as short of a period as possible. Multiple inquires over the course of week is fine. Multiple inquires over the course of a couple of months will hurt you.
  10. Consider getting yourself added as an authorized user on someone else’s account who has good credit, for example a spouse or a parent.
  11. Make sure joint accounts are listed as such.
  12. If accounts are showing up multiple times on your report, get the duplicates removed.
Posted in Fair Credit Reporting Act | Leave a comment


Junk debt, sometimes known as zombie debt, is debt that has been sold multiple times. Often the debt is bought for pennies on the dollar and then the buyer of debt tries to collect 100 cents on the dollar and often attorney’s fees and interest on top of the actual debt. The practice can be highly profitable. The owner of the debt just needs to be able to collect periodically. Often this means being aggressive in collection efforts and doing it on a mass scale.

The debt that is selling for pennies on the dollar generally has some problems with it. The original debt collector has been unable to collect on it. Once the debt has been sold one or more times, it generally accumulates some new problems. These problems often make the debt legally unenforceable. Often these issues never get raised and the debt gets collected.

The problems are pretty basic and almost certainly anyone well acquainted with the collection of such debts is aware of them. The debtor though is often not and often the debtor is unable to afford an attorney even though it would likely totally change the dynamics of the situation.

The Typical problems are:

A.  The debt buyer and sometimes even the original creditor cannot prove the debt. They just don’t have the evidence whether it be documentary evidence or witnesses. A civil defendant always has the right to make a plaintiff prove his case against him. This process is necessary to protect the integrity of the judicial system.

B. The statute of limitations may have expired. On credit card debt in Virginia, this is going to be either three or five years, depending on whether or not the debt is based on a written contract or not. People are supposed to get second chances unless they’ve done something like murder. There is no statute of limitations for murder.

C. The assignment may not be provable. You cannot collect on  a debt that you do not own. When you are selling something for pennies on the dollar, details generally get overlooked.

D. The debt may be based off of inadmissible evidence, e.g. hearsay. Often it is hearsay within hearsay. Hearsay is generally not admissible in Court because it is considered unreliable.  There are exceptions.

E. Someone has already sued the debtor for the debt and now someone is trying to take a new bite at the apple. This is called res judicata and it is not permitted.

The success of the debt collection industry is based on of people paying the debts without having full knowledge of the law and their rights. The industry makes a lot of money because the debt owner claims do not get tested in Court. If you want to pay debts that you don’t legally owe out of a sense of obligation, you should pay the original creditor.

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Virginia’s Automobile Repair Facilities Act

The Virginia Automobile Repair Facilities Act, (59.1-207.3 of the Code of Virginia), sets forth requirements for automobile repair facilities’ contracts with consumers. Written estimates are required (e.g. labor costs, part costs, time to repair, description of problem) if requested, and must be provided before work of more than $25 is commenced. A repair facility may impose a reasonable diagnostic fee but it must disclose this fee upfront.

Unauthorized charges for repairs that exceed 110 percent of the estimated costs are prohibited. The repair facility is also required to offer to return the replaced parts, as well as to provide a written invoice that clearly states the work performed and the charges for parts and labor. A violation of the ARFA is a violation of the Virginia Consumer  Protection Act and is subject to its enforcement provisions.

Posted in Autos, Consumer Protection Laws | Leave a comment

Student Loan Burdens and Forgiveness

An interesting starting point if you are dealing with student loans you can’t handle.


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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.


Posted in Home Ownership, Insurance | Leave a comment

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.

Posted in Bankruptcy, Debt Settlement | Leave a comment