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They Were Under Oath & On Reality TV! Part 2

Abigale Lee Miller is the central presence on Lifetime channel’s “Dance Moms,” reality television surrounding the Abby Lee Dance Company, a painful drama of driven pre-teen competitors and hovering mothers and Miller – our next reality star whose bankruptcy truthfulness was found wanting.

Abby Lee Miller’s rise in celebrity status began seven months after filing a Chapter 11 bankruptcy reorganization in December 2010. This court-supervised repayment plan obligated her to truthfully tell the court, every month, what her gross income was, what her expenses were, and deposit all monies earned in a traceable account. She was to make a set payment for a number of years on this plan. But Miller’s fame and fortune caught up.

When Miller’s actual finances were discovered in early 2013, as a result of a bankruptcy judge channel-surfing and spotting her show well before any investigation, she offered to amend her Chapter 11 plan and pay off all if her debts in full. The judge wanted an investigation, as $288,000 in income was disclosed at the February 1, 2013 hearing (link opens a PDF, see page 12) without any explanation. According to the indictment, Miller told the court that income from the reality television show was “volatile” and denied that any contracts for the show existed (link opens a PDF, see #23 on page 9).

under oath

Miller really doubled down. Within less than a month after that hearing before the bankruptcy judge, and freshly admonished, she – according to Reuters.com and the indictment – sent an email to a joint partner and her accountant with a subject field stating “LET’S MAKE MONEY AND KEEP ME OUT OF JAIL.” To be clearer, she then told them that they needed to avoid raising any “red flags” and instructed both of them: “DON’T PUT CASH IN THE BANK!!!!” The end result was more investigation, culminating in the October 13, 2015 indictment for 20-counts of bankruptcy fraud for concealing income.

This is an indictment, not in a conviction. But to you or me, if that’s her email, that is evidence of criminal intent.

What did Joe, Teresa and allegedly Abby fail to comprehend? Their core failure was to take not take seriously the obligation to disclose to the court what they owned. No lawyer can correct dishonesty.

The concept of what a person contemplating bankruptcy actually owns is technical and complicated. Being vague and being downright dishonest are recipes for disaster, as the above television stars have realized.

It is natural to resent the fact that what you have worked hard to gain could be jeopardized because of collapsed finances. Our advice is not to let that resentment lead you astray when considering, and filing, bankruptcy.

Sources: IMDB.com, Reuters.com, The United States District Court for the Western District of Pennsylvania (opens a PDF), WTAE.com

Debt Vultures

If you have unpaid debt on credit cards and loans, a debt vulture could come circling.

What is a debt vulture? A debt vulture is my description for a kind of collection company that may be on your tail.

Image from http://occupywallstreet.net/story/debt-vultures.

Image from http://occupywallstreet.net/story/debt-vultures.

These types of collections companies have taken over a large segment of the collection of delinquent debt from people whom are unable to pay them. That kind of company is called a “debt buyer.”

Their business model is genius. These companies purchase debts that were written off by credit card issuers, store credit like Lowe’s, Home Depot, and Best Buy – along with medical bills and balances remaining after vehicle repossessions. They purchase these debts at a deep discount, in bulk (think hundreds of thousand accounts at a time!) and then the hunt commences!

They look for the unfortunate borrower, who has a job, with wages they need to pay their family’s bills, and look to force payment, usually through a lawsuit or the threat of lawsuit, and garnish wages and bank accounts.

And of late, my office has seen smaller and smaller balances being sued for – less than $500 in one recent case!

This scary industry is huge. The largest debt vulture of them all is Encore Capital, Inc., located in San Diego, California. You likely never heard of them. They don’t use their name to collect. They do it through subsidiaries with names like Asset Acceptance Capital Corporation, Midland Credit Management, and Midland Funding LLC.

If you get threat letters from these, and similar, companies, the debt vultures are after you.

The second largest debt vulture is Portfolio Recovery Associates. As a public corporation, you can buy their stock!

Both corporations make a handsome profit from this aggressive and depressing business model.

And, if you get mail from these companies, keep in mind that you are the ‘asset’ in Asset Acceptance, you are the ‘fund’ in Midland Funding, and the ‘portfolio’ in Portfolio Recovery. I think that these companies see you – their victims – as a body of ore, to be mined.

This is American commerce, and the debt is real. But most consumer debt has built-in contractual mechanisms, mostly default interest rates well over twenty percent – along with late fees – that cause the amount owed to mushroom.

Of special concern are unpaid accounts that are four years or more since payments were defaulted. At least in Arizona, these companies, if lawsuits and garnishments are their aim, must sue with the allotted time under state law, which, in Arizona, is a long six years from default. So, when a debt vulture is running out of time to sue is when this species gets most aggressive, often filing lawsuits before the deadline runs out to preserve their position.

Not all has been roses for debt vultures. In September 2015, the Consumer Financial Protection Bureau announced its findings into the debt collections practices of Encore and Portfolio, and ordered them to in some cases refund monies to consumers, and “overhaul their debt collection and litigation practices and to stop reselling debts to third parties.” You can read more about it here.

I predict that they’ll keep mining the ore body of the working public, because it is just too lucrative. After all, if these companies pay less than five percent of the face value of debt, and average even a paltry ten percent in total recovery, but they own hundreds of millions in debt, their profit margin is pretty beefy.

If you get mail or phone calls from these aggressive vultures, I can help you consider your course of action. Schedule a free and thorough consultation of your options by contacting my office for an appointment at (520) 299-4922.

Beware of “Credit Repair” Scams

Credit Scams

Desperate times call for… no, they don’t call for desperate measures. They call for calm reasoning of the situation and how to effectively, and legally, change the current circumstances. As they say, “A fool is born every minute.” Don’t be a fool and don’t get caught up in a scam. Arm yourself with knowledge on how to get through what is happening.
“Forewarned is forearmed!”

As the Federal Trade Commission writes on its website:
“You see the ads in newspapers, on TV, and online. You hear them on the radio. You get fliers in the mail, email messages, and maybe even calls offering credit repair services. They all make the same claim:
– Credit problems? No problem!
– We can remove bankruptcies, judgments, liens, and bad loans from your credit file forever!
– We can erase your bad credit — 100% guaranteed.
– Create a new credit identity — legally.

Do yourself a favor and save some money, too. Don’t believe these claims: they’re very likely signs of a scam. Indeed, attorneys at the Federal Trade Commission, the nation’s consumer protection agency, say they’ve never seen a legitimate credit repair operation making those claims. The fact is there’s no quick fix for creditworthiness. You can improve your credit report legitimately, but it takes time, a conscious effort, and sticking to a personal debt repayment plan.”

Read more about your rights, from the Federal Trade Commission’s website, here.
If you have questions about your eligibility for bankruptcy, or ways to avoid bankruptcy through other means, schedule an appointment with Daniel Rylander at (520) 299-4922.