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Monday, May 27, 2024 | Back issues
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Class Sees a Shady Angle on Debt Collection

MILWAUKEE (CN) - A debt collector sent foreclosed homeowners unscrupulous offers via so-called "scratch-and-win" settlement cards, to trick them into paying on nonrecourse mortgage loans after they lost their home, a class action claims in Federal Court.

Kimberly Aker sued Real Time Resolutions, a Dallas-based company that buys and collects on debts.

Aker claims that in March this year Real Time sent her a debt collection letter about an alleged second mortgage on her home that was foreclosed upon in 2010.

Aker says that debt was a non-recourse loan: satisfiable only by seizure of the collateral, but not the assets of the borrower, so she is not personally liable for the loan as the property secured by the loan was sold at foreclosure.

Real Time's letter "purports to offer the consumer a chance to settle her alleged debt at a discounted 'winning percentage,' the amount of which is revealed by scratching the houses on an enclosed 'scratch-and-win' card," according to the lawsuit.

A second letter offered Aker up to 88 percent off the same bogus debt, via three settlement plans, she says. "These great offers expire on 10/15/13," the second letter said.

Aker says: "The 'scratch-and-win' card is a sham, intended to fool class members into believing that they have won a significant discount on a large outstanding obligation. In fact, the class members have won nothing.

"Upon information and belief, all of the 'scratch-and-win' cards printed and mailed to the class members purport to offer 88% off the alleged balance due.

"Additionally, [the letter] identifies the alleged debt at issue in this action as a 'loan with no recourse.' Plaintiff has no obligation to pay the debts identified in [the letter] beyond foreclosure of the property.

"Thus, [the letters] misrepresent to the consumer that paying 12 or 15 percent of the debt is a benefit because the consumer is not obligated to pay anything."

(Bracketed words refer to exhibits.)

Because plaintiffs' loans are "without recourse," plaintiffs are not liable for the debt beyond the forfeiture of the property that secured the loan.

Finally: "The 'deadline' to respond to the settlement offer is a sham. There is no actual deadline. The sole purpose of the purported deadline is to impart in the consumer a false sense of urgency to pay," Akers says.

She seeks actual and statutory damages for violations of the Fair Debt Collection Practices Act, and costs.

She is represented by John Blythin with Ademi & O'Reilly in Cudahy, Wisc.

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