Charlotte Bankruptcy Lawyer Bryan W. Stone of Arnold & Smith, PLLC answers the question “Can I get rid of student loans by declaring bankruptcy?”
In 2009, to much fanfare from consumer advocates, then-Gov. Beverly Perdue signed North Carolina’s Consumer Protection Act into law. A year later, Pres. Obama signed the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act into law. The Dodd-Frank Act created a new federal agency called the Consumer Financial Protection Bureau.
The goal of the new legislation – passed in the wake of the 2008 financial crisis – was to both inform and protect consumers. In addition, the federal agency was tasked with enforcing federal consumer financial laws against banks, credit unions and other financial institutions. The North Carolina Department of Justice likewise employs consumer protection experts who “fight unfair business practices like scams and frauds” at the state level.
Consumers may have been unaware that prior to the passage of these acts, the N.C. General Statutes already provided causes of action designed to make shady collection agencies pay. Chapter 58 of the general statutes prohibits collection agencies from engaging in a number of practices, including making certain threats, publicizing a consumer’s debt to third parties for the purpose of shaming the consumer, calling the consumer repeatedly before or after business hours, and a number of other unreasonable, deceptive and unfair practices.
In 2010, a Durham woman named Virginia Simmons disputed and refused to pay a bill from Home Design Studio, LLC. Home Design engaged a collection agency to collect a debt from her. The parties settled their dispute on June 3, 2011, but Kross, Lieberman & Stone, Inc., the collection agency, continued to contact Simmons in an effort to collect the Home Design debt.
Ms. Simmons’ lawyer notified Kross that he represented her. N.C. Gen. Stat. § 58-70-115(3) prohibits collection agencies from communicating with a consumer “whenever the collection agency has been notified by the consumer’s attorney that he represents said consumer.” Kross, however, continued to contact Ms. Simmons, sending a demand for payment to her months after being notified that she was represented by counsel.
Ms. Simmons brought suit against Kross. Superior Court Judge Orlando Hudson dismissed the lawsuit, but Ms. Simmons appealed, and the N.C. Court of Appeals reversed the case in part. The Court of Appeals agreed with Judge Hudson that Ms. Simmons’ complaint for actual damages should have been dismissed.
Since Ms. Simmons’ complaint alleged a technical violation of the statute, however – Kross sent its demand letter after being notified that Ms. Simmons was represented by counsel – she could proceed to trial to attempt to recover a “civil penalty.” N.C. Gen. Stat. § 58-70-130(b) provides for a civil penalty of between $500 and $4,000 for each collection agency violation.
The Simmons case was one of first impression for the N.C. Court of Appeals, meaning the appellate court had not addressed the issue of whether a failure to show any actual damage barred Ms. Simmons from recovering a civil penalty from Kross. The court ruled that Ms. Simmons could recover the penalty, even though she could not show she was actually harmed by Kross’ collection activities.
The potential liability for collection agencies that fail to toe the line is huge. Since the-between-$500-and-$4,000 civil penalty is assessed on a per-violation basis, if Kross had called Simmons ten times after being notified that she was represented by counsel, the civil penalty imposed could run as high as $40,000.
The Simmons case illustrates how when dealing with collection agencies that engage in practices inconsistent with North Carolina law, a consumer’s quiver is full of arrows. If you believe you are the victim of shady collection agency practices or know someone who is, please have them contact me to set up an appointment. Even technical violations of the law that do not result in any actual damages to a consumer can subject collection agencies to significant potential civil penalties.
Arnold & Smith, PLLC is a Charlotte based criminal defense, traffic violation defense and civil litigation law firm servicing Charlotte and the surrounding area. If you or someone you know need legal assistance, please contact Arnold & Smith, PLLC today at (704) 370-2828 or find additional resources here.
About the Author
Bryan Stone is a Partner with Arnold & Smith, PLLC, where he focuses his practice on all aspects of bankruptcy, including: Chapter 7, Chapter 11, Chapter 13, home loan modifications and landlord-tenant issues.
A native of Macon, Georgia, Mr. Stone attended the University of Georgia, where he earned a BBA in Banking and Finance, and Wake Forest University School of Law, where he obtained his law degree.
Following law school, Mr. Stone relocated to Charlotte, where he currently serves as Chair of “Bravo!” – a young professionals organization associated with Opera Carolina – and founded the University of Georgia Alumni Association of Charlotte.
In his spare time, Mr. Stone enjoys perfecting his barbeque skills for the annual “Q-City BBQ Championship” and playing softball in the Mecklenburg County Bar softball league.
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