Student Loans: Debt for Life

Student Loans: Debt for Life

This much we know: College pays. You can lose your house to foreclosure, but never your education. Four-year college graduates’ pay advantage over high school grads has doubled over the past 30 years. If money for tuition is tight, the advice goes, borrow what you need. Students have been listening. In 2010 student debt exceeded credit-card debt for the first time. In 2011 it surpassed loans for vehicles. In March, the Consumer Financial Protection Bureau announced that student debt had passed $1 trillion. It grew by $300 billion from the third quarter of 2008 even as other forms of debt shrank by $1.6 trillion, according to a separate tabulation by the Federal Reserve Bank of New York. In a press briefing at the White House in April, Education Secretary Arne Duncan said, “Obviously if you have no debt that’s maybe the best situation, but this is not bad debt to have. In fact, it’s very good debt to have.”

If student loans are good debt, how do you account for the reaction of Christina Mills, 30, of Minneapolis, when she found out her payment on college and loans from law school would be $1,400 a month? “I just went into the car and started sobbing,” says Mills, who works for a nonprofit. “It was more than my paycheck at the time.” Medical student Thomas Smith, 25, of Hamilton, N.J., is $310,000 in debt and is struggling to make ends meet even before beginning to repay his loans. “I don’t even know what I eat,” he says. “I just go to the supermarket and buy the cheapest thing I can and buy as much of it as I can.” Then there’s Michael DiPietro, 25, of Brooklyn, who accumulated about $100,000 in debt while getting a bachelor’s degree in fashion, sculpture, and performance, and spent the next two years waiting tables. He has since landed a fundraising job in the arts but still has no idea how he will pay back all that money. “I’ve come to the conclusion that it’s an obsolete idea that a college education is like your golden ticket,” DiPietro says. “It’s an idea that an older generation holds on to.”

Even if you buy into the notion that education debt is good debt, at what point does it become too much of a good thing? Mark Kantrowitz, publisher of, which researches aid to financially assist students, estimates that student debt, compounded by rising enrollments, is growing by nearly $3,000 a second.

“The question isn’t the debt per se. It’s what the students are getting in return,” says Richard Arum, a New York University sociologist who specializes in education. Many students are incurring heavy debts for an education (ethnomusicology, theater arts) that just isn’t worth it from a strictly financial viewpoint. (Money isn’t everything, but try telling that to the collection agency.) Education is a benefit to society by creating a workforce that creates wealth, pays taxes, and stays off welfare. But state governments—whose schools educate 7 in 10 students—have raised tuition abruptly because of their own financial problems. So far the federal government has offset the state cutbacks by boosting financial aid, but Education Under Secretary Martha Kanter testified to Congress earlier this year that “this path is not fiscally sustainable.”

There’s a lot of speculation that college debt is the next bubble after housing, the latest sector in which prices leap above real value. American colleges may not be turning out the kind of graduates that employers want. In Academically Adrift: Limited Learning on College Campuses, NYU’s Arum and sociologist Josipa Roksa of the University of Virginia write that employers are being forced to turn to foreigners or graduate and professional schools to fill jobs that they once filled with homegrown college graduates.

That’s the value side. The cost side is ugly, too. The economic slump that began in 2007 has forced people to pay more for college even as it has driven more of them into it as a refuge from an unfriendly job market. The National Center for Education Statistics projects that college attendance this fall will be up 19 percent from the fall of 2007. Meanwhile, state and local support for higher education last year was the lowest in 25 years of measurement, in inflation-adjusted dollars per student, according to the State Higher Education Executive Officers Association. Two-thirds of college seniors graduated with loans in 2010, and those who did had an average of about $25,000, according to the Institute for College Access & Success. posted on September 06, 2012 14:08


What a Half Million Unwary Consumers Don’t Know: Schemes Only Work for 1 in 10 Who Pay for Them; Consumer Alert: Programs That Promise to Settle Debt are Seen as “#1 Threat to America’s Most Indebted Consumers.”

WASHINGTON, D.C. – As few as one in 10 unwary consumers who are lured into so-called “debt settlement” schemes actually end up debt free in the promised period of time, making the risky schemes the No. 1 threat facing America’s most deeply indebted Americans, according to a major new consumer alert issued today by the nonprofit National Association of Consumer Bankruptcy Attorneys (NACBA).

Available online at, the NACBA consumer alert notes: “Already struggling with home foreclosures, harsh bank and credit card fees, and other major financial challenges, America’s most deeply indebted consumers are now falling victim to a major new threat: so-called ‘debt settlement’ schemes that promise to make clients ’debt free’ in a relatively short period of time. Unfortunately, most consumers who pursue debt services offering to settle debt find themselves facing not relief but even steeper financial losses. Even the industry acknowledges – though not in its ever-present radio and online advertising – that debt settlement schemes fail to work for about two thirds of clients. Federal and state officials put the debt-settlement success rate even lower – at about one in 10 cases – meaning that the vast majority of unwary and uninformed consumers end up with more red ink, not the promised debt-free outcome.”

The private debt-settlement industry remains robust. More than 500,000 Americans with approximately $15 billion of debt are currently enrolled in programs that promise to settle debt, according to industry estimates. And there is room for further growth: One in 8 U.S. households has more than $10,000 in credit card debt.

Durham, NC bankruptcy attorney Ed Boltz, NACBA Board member and incoming NACBA president, said: “Based on what bankruptcy attorneys are seeing across the nation, we believe that debt settlement schemes are the number one problem facing America’s most deeply indebted consumers today. Bombarded with slick radio and Web advertising falsely promising a smooth road to being debt free in a short period of time, these companies prey on the most desperate victims of the economic downturn. These particularly vulnerable consumers usually end up getting sued, stuck with outrageous fees, more deeply in debt, and far worse off in terms of their credit score.”

Earlier this year, NACBA focused national attention on the “student debt bomb,” which then was identified as the fastest growing consumer debt problem being handled by consumer bankruptcy attorneys.

Richard Thompson, a Rialto, California, retiree and victim of a debt settlement scheme, said: “I was told they could settle my $89,000 in debts for a total of $39,000 if I made payments of $1,800 for 22 months. I was contacted about a chance to settle $15,000 debt for $6,000 but my debt-settlement company ignored the offer. In fact, I paid them a total of $25,200 as they kept on ignoring settlement offers from creditors. I thought they were taking care of me by bringing my debt down, but all they were doing was taking my money. I ended up with $25,000 more in debt than I started out with. Before I retired I worked 25 years as a manager, now I have had to go back to work as a part-time security guard to help make ends meet.”

Bankruptcy attorney Trisha Connors, a NACBA member from Glen Rock, New Jersey who has testified before the New Jersey Law Revision Commission on debt settlement abuses, said: “Over the last three years, I have worked with 12 different for-profit debt settlement companies and over 25 clients who came to me after their debt settlement program failed to serve them. The results with each client were the same: exorbitant fees being paid, settlement (at best) of one small credit card debt, and mounting late fees and penalty interest charges on the unsettled debts. When clients informed the companies that promised to settle their debts of their desire to exit the program, the firms kept all or most of the accumulated savings for debt reduction as ‘fees.’ Every person I dealt with who had been current on their debts prior to contacting a debt settlement program told me that the sales representative told him the only way to be successful in the program is to stop paying credit card bills.”

Ellen Harnick, senior policy counsel, Center for Responsible Lending, said: “Debt settlement companies require clients to default on their debts before they will negotiate. This adds late fees and penalty interest to their debt and frequently results in the client being sued by creditors. Since only a tiny proportion of debts are actually settled by these companies, clients are typically left worse off than they were when they started.”

In addition to highlighting the stories of three victims of debt settlement schemes, the NACBA consumer alert notes the following:

• There is now across-the-board agreement on the danger that debt settlement schemes pose to consumers. The Better Business Bureau has designated debt settlement as an “inherently problematic business.” Similarly, the New York City Department of Consumer Affairs called debt settlement “the single greatest consumer fraud of the year.” Across the country, the U.S. Government Accountability Office (GAO), the Federal Trade Commission, 41 state attorneys general, consumer and legal services entities, and consumer bankruptcy attorneys have all uncovered substantial evidence of abuses by a wide range of debt settlement companies.

• Debt settlement schemes encourage consumers to default on their debts. Because creditors frequently will not negotiate reduced balances with consumers who are still current on their bills, debt settlement companies often instruct their clients to stop making monthly payments, explaining that they will negotiate a settlement with funds the client has paid in lieu of their monthly debt repayments. Once the client defaults, he or she faces fines, penalties, higher interest rates, and are subjected to increasingly aggressive debt-collection efforts including litigation and wage garnishment. Consequently, consumers often find themselves worse off than when the process of debt settlement began: They are deeper in debt, with their credit scores severely harmed.

• “Self help” may be the best answer for smaller debt burdens. If you have just a single debt that you are having trouble paying (such as a single credit card debt) and you have cash on hand that can be used to settle the debt, you may be able to negotiate favorable settlement terms with the creditor yourself. Creditors typically require anywhere from 25 to 70 percent on the dollar to settle a debt so you will need that much cash for a successful offer. Be sure to get an explicit written document from the creditor spelling out the terms of the debt settlement and relieving you of any future liability. Also be prepared to pay income taxes on any of the forgiven debt.

• Nonprofit credit counseling agencies can help, but must be vetted carefully. If, like most people, you owe multiple creditors and do not have the cash on hand to settle those debts, you may want to consult a non-profit credit counseling agency to see if there is a way for you to get out of debt. But make sure to check it out first: Just because an organization says it’s a “nonprofit” there is no guarantee that its services are free, affordable or even legitimate. Some credit counseling organizations charge high fees (which may not be obvious initially) or urge consumers to make “voluntary” contributions that may lead to more debt. The federal government maintains a list of government-approved credit counseling organizations, by state, at If a credit counseling organization says it is “government approved,” check them out first.

• Bankruptcy will be an option for some consumers. Bankruptcy is a legal proceeding that offers a fresh start for people who face financial difficulty and can’t repay their debts. If you are facing foreclosure, repossession of your car, wage garnishment, utility shut-off or other debt collection activity, bankruptcy may be the only option available for stopping those actions. There are two primary types of personal bankruptcy: Chapter 7 and Chapter 13. Chapter 13 allows people with a stable income to keep property, such as a house or car, which they may otherwise lose through foreclosure or repossession. In a Chapter 13 proceeding, the bankruptcy court approves a repayment plan that allows you to pay your debts during a three to five year period. After you have made all the payments under the plan, you receive a discharge of all or most remaining debts. For tax purposes, a person filing for bankruptcy is considered insolvent and the forgiven debt is not considered income. Chapter 7 also eliminates most debts without tax consequences, and without any loss of property in over 90 percent of cases. To learn more about bankruptcy and whether it makes sense for you, go to for more information.

NACBA urges consumers to steer clear of any companies that:

• Make promises that unsecured debts can be paid off for pennies on the dollar. There is no guarantee that any creditor will accept partial payment of a legitimate debt. Your best bet is to contact the creditor directly as soon as you have problems making payments.

• Require substantial monthly service fees and demand payment of a percentage of what they’ve supposedly saved you. Most debt settlement companies charge hefty fees for their services, including a fee to establish the account with the debt negotiator, a monthly service fee, and a final fee– a percentage of the money you’ve allegedly saved.

• Tell you to stop making payments or to stop communicating with your creditors. If you stop making payments on a credit card or other debts, expect late fees and interest to be added to the amount you owe each month. If you exceed your credit limit, expect additional fees and charges to be added. Your credit score will also suffer as a result of not making payments.

• Suggest that there is only a small likelihood that you will be sued by creditors. In fact, this is a likely outcome. Signing up with a debt settlement company makes it more likely that creditors will accelerate collection efforts against you. Creditors have the right to sue you to recover the money you owe. And sometimes when creditors win a lawsuit, they have the right to garnish your wages or put a lien on your home.

• State that they can remove accurate negative information from your credit report. No company or person can remove negative information from your credit report that is accurate and timely.

Boltz emphasized: “Many different kinds of services claim to help people with debt problems. The truth is that no single solution works in all cases. Bankruptcy is an option that makes sense for some consumers, but it’s not for everyone. For example, the National Association of Consumer Bankruptcy Attorneys and its individual consumer bankruptcy attorney members do not encourage every person who looks at bankruptcy to enter into it. What makes sense for each consumer will depend on their individual circumstances. We encourage everyone to get the facts and do what makes the most sense in their situation.”


The National Association of Consumer Bankruptcy Attorneys ( is the only national organization dedicated to serving the needs of consumer bankruptcy attorneys and protecting the rights of consumer debtors in bankruptcy. Formed in 1992, NACBA now has more than 4,000 members located in all 50 states and Puerto Rico.

MEDIA CONTACT: Patrick Mitchell, for NACBA, (703) 276-3266, or


Though complaints about debt collectors are pouring into a federal database that tracks allegations of illegal late-night phone calls, arrest threats and other abuse, few of the complaints are likely to result in enforcement actions, the Wall Street Journal reported recently.

The debt-collection industry, booming as many Americans struggle to catch up on their payments or walk away from what they owe, was the subject of a record 164,361 complaints through Dec. 8 of 2011, according to the Federal Trade Commission.

The total is 17 percent higher than the 140,036 debt-collection complaints the FTC got for 2010.

Since the start of 2011, though, the FTC has launched just four enforcement actions against debt-collection firms under the primary federal law used to oversee the industry.

From 2005-10, the average was two cases a year. FTC officials said that the small number of enforcement actions against debt collectors is a misleading barometer of its determination to punish violators.

J. Reilly Dolan, acting director of the agency’s financial-practices division, said that the FTC "is cracking down on abusive collection practices and directs its resources to go after some of the largest debt collectors."

Senate’s “No” Vote on Cordray Nomination for CFPB Director Is a Blow to Students and Families

The United States Senate has blocked a vote on the nomination of Richard Cordray as Director of the new Consumer Financial Protection Bureau (CFPB). Without a Director, the CFPB cannot exercise its full authority to protect students and their families from deceptive and predatory private student loan practices.

Consumers across the country are counting on the CFPB to oversee and supervise the consumer financial products that affect their lives, including private student loans. Private student loans are one of the riskiest, most expensive ways to pay for college.

Like credit cards, private student loans can have uncapped variable interest rates that are highest for those who can least afford them. They also lack the consumer protections and flexible repayment options that are provided by federal student loans, and they are usually not dischargable in bankruptcy.

That is why a broad coalition of student, consumer, civil rights and higher education organizations strongly supported the creation of the CFPB with authority over all private student loans.

As Senate Banking Committee Chairman Tim Johnson, Senator Jack Reed, and others noted in their floor statements, the CFPB plays a crucial role for private student loans. Students and their families need the CFPB now more than ever to fulfill its critical mission with full authority. Richard Cordray is highly qualified to serve as its director, and blocking his nomination has done a great disservice to all consumers.

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An independent, nonprofit organization, the Institute for College Access & Success works to make higher education more available and affordable for people of all backgrounds. The Institute’s Project on Student Debt works to increase public understanding of rising student debt and the implications for our families, economy, and society. For more information see

N.C. Supreme Court Weighs Whether Foreclosures Need Original Documents

North Carolina’s Supreme Court heard arguments in a case that could decide whether mortgage lenders can foreclose on a home without producing original documents that prove they are owed the money, the Associated Press reported.

The court heard from attorneys representing Wells Fargo and a Duplin County homeowner whose $50,000 loan was transferred to a series of secondary financial companies.

Lawyers for Linda Dobson of Magnolia, NC argued that Wells Fargo and its affiliates cannot foreclose on her home without producing the original promissory note proving they are due the debt, something they have not done after more than three years.

Wells Fargo attorney John Mandulak said it has not produced the original loan documents yet, but might be able to do that if the court agrees to revive its case and send it back to a lower court for trial.


In its first three months in operation, the Consumer Financial Protection Bureau (CFPB) received more than 5,000 complaints from credit card customers, led by billing disputes and interest rate problems, the Reuters news agency recently reported.

The CFPB said that complaints varied but at the top of the list were billing disputes, interest rate problems and fraud concerns.

The CFPB said it forwarded 4,254 of the complaints to card issuers. According to the issuers, 74 percent of those cases have been at least partially resolved, and in 71 percent the customer did not disagree, the agency said.

Former Ohio Attorney General Nominated to Head Consumer Financial Protection Bureau

Former Ohio Attorney General Nominated to Head Consumer Financial Protection Bureau

President Obama said that he would nominate Richard Cordray, the former attorney general of Ohio, to lead the new Consumer Financial Protection Bureau, passing over Elizabeth Warren, the Harvard law professor who was the driving force behind the agency’s creation, the New York Times reported.

Cordray came to national attention for his aggressive investigations of mortgage foreclosure practices while he was attorney general. He is already an employee of the watchdog agency, as the leader of its enforcement division.

Justice Department Settles with Bank of America and Saxon Mortgage for Illegally Foreclosing on Servicemembers

Settlement Includes a Minimum of $22 Million in Relief for Victims

WASHINGTON – The Justice Department recently announced settlements with two lenders under the Servicemembers Civil Relief Act (SCRA) to resolve allegations that the lenders wrongfully foreclosed upon active duty servicemembers without first obtaining court orders, in violation of the SCRA. Combined, the settlements provide more than $22 million in monetary relief for the victims.

Under the first settlement , BAC Home Loans Servicing LP, formerly known as Countrywide Home Loans Servicing LP, a subsidiary of Bank of America Corporation, will pay $20 million to resolve a lawsuit alleging that Countrywide foreclosed on approximately 160 servicemembers between January 2006 and May 2009 without court orders. In addition to the $20 million, Countrywide agreed to pay any servicemember wrongfully foreclosed in the period from June 2009 through 2010. The complaint alleges that Countrywide did not consistently check the military status of borrowers on whom it foreclosed through at least May 31, 2009. The complaint was filed in the Central District of California, where Countrywide is headquartered.

Under the second settlement, Saxon Mortgage Services Inc., a subsidiary of Morgan Stanley, will pay $2.35 million to resolve a lawsuit alleging that Saxon foreclosed on approximately 17 servicemembers between January 2006 and June 2009 without court orders. In addition to the $2.35 million, Saxon agreed to pay any servicemember wrongfully foreclosed in the period from July 2009 through 2010. The complaint alleges that Saxon failed to consistently or accurately check the military status of borrowers on whom it foreclosed through at least June 30, 2009. The complaint was filed in the Northern District of Texas, where Saxon is headquartered.

“The men and women who serve our nation in the armed forces deserve, at the very least, to know that they will not have their homes taken from them wrongfully while they are bravely putting their lives on the line on behalf of their country,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division of the Department of Justice. “The Civil Rights Division is committed to aggressively enforcing those laws that protect the rights of servicemembers. All lenders have an obligation to do their part to work with servicemembers while these brave men and women focus on keeping us safe. The Justice Department also thanks the Department of Defense for its critical assistance in identifying servicemembers whose rights were violated”

“Countrywide Home Loans failed to protect and respect the rights of our servicemembers, failed to comply with clearly mandated procedures and foreclosed against homeowners who are valiantly serving our nation,” said André Birotte Jr, U.S. Attorney for the Central District of California. “Military families lost their homes when Countrywide violated the law, causing undue stress to wartime personnel who have been protected from such actions since the Civil War.”

“With the numerous sacrifices our servicemembers make while they are serving our country, the last thing they need to worry about is whether or not their families will be forced from their homes,” said James T. Jacks, U.S. Attorney for the Northern District of Texas. “These lenders’ callous disregard for the SCRA, a law which was designed to insulate these patriots from unlawful foreclosures and other civil and financial obligations while they are on active duty, is deplorable and I applaud the Department’s Civil Rights Division’s efforts in identifying and seeking remedies for these wronged service members.”

Of the approximately 160 servicemembers upon whom Countrywide foreclosed without obtaining court orders, Countrywide allegedly foreclosed in many instances where it knew, or should have known, about their military status. The victims include individuals who have served honorably in Iraq and Afghanistan. The Department of Justice initiated its SCRA investigation of Countrywide in response to a referral by the U.S. Marine Corps regarding an active duty servicemember who was facing foreclosure by Countrywide.

Under the consent decree, Countrywide will establish a settlement fund of $20 million to compensate the servicemembers upon whom Countrywide foreclosed between January 1, 2006, and May 31, 2009. In addition to this settlement fund, Countrywide has agreed to compensate any additional SCRA-eligible individuals on whom Countrywide foreclosed without court orders between June 1, 2009, and Dec. 31, 2010. The consent decree also requires numerous corrective measures, including SCRA training for Countrywide employees and agents, developing modified SCRA policies and procedures and referring future SCRA complaints to the Justice Department. Countrywide will also repair any negative credit report entries related to the allegedly wrongful foreclosures and will not pursue any remaining amounts owed under the mortgages. Countrywide now will check the Defense Manpower Data Center’s website and its own files prior to conducting any foreclosure, and will not foreclose in violation of the SCRA if the borrower is in military service or is otherwise protected by the SCRA.

Of the approximately 18 servicemembers upon whom Saxon foreclosed without obtaining court orders, Saxon allegedly foreclosed on at least 10 servicemembers when Saxon knew or should have known about their military status. The servicemembers Saxon foreclosed on include men and women who have served honorably in Iraq, some of whom were severely injured in the line of duty or suffer from post-traumatic stress disorder. The Department of Justice initiated its SCRA investigation in response to an inquiry from Sergeant James Hurley, who resolved his claims against Saxon earlier this year in a confidential settlement.

Under the consent decree, Saxon will establish a settlement fund of $2.35 million to compensate the servicemembers upon whom Saxon allegedly wrongfully foreclosed between 2006 and 2009. In addition to this settlement fund, Saxon also has agreed to compensate any additional SCRA-eligible servicemembers on whom Saxon foreclosed without court orders between July 1, 2009, and Dec. 31, 2010. The consent decree also requires numerous corrective measures, including SCRA training for Saxon employees and agents, developing modified SCRA policies and procedures, and referring future SCRA complaints to the Justice Department. Saxon will also repair any negative credit report entries related to the wrongful foreclosures and will not pursue any remaining amounts owing under the mortgages. Saxon now will check the Defense Manpower Data Center’s website and its own files prior to conducting any foreclosure, and will not foreclose in violation of the SCRA if the borrower is in military service or is otherwise protected by the SCRA.

The division’s SCRA investigations have resulted in litigation or settlements enforcing SCRA’s provisions for termination of residential lease agreements, protection against enforcement of storage liens on towed vehicles without court orders, reduction of interest rates to six percent on credit obligations, and a prohibition against paying pre-payment penalties on mortgage loans when a servicemember must move for military service.

President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit .

Servicemembers and their dependents who believe that their SCRA rights have been violated should contact the nearest Armed Forces Legal Assistance Program office. Please consult the military legal assistance office locator at and click on the Legal Services Locator. Additional information about the Justice Department’s enforcement of the SCRA and the other laws protecting servicemembers is available at Servicemembers who believe they may have been victims, can contact the banks directly at 1-800-896-7743, mailbox 6 for Countrywide or 1-800-896-7743, mailbox 995 for Saxon.


The American Bar Association has announced that Judge J. Rich Leonard of

the United States Bankruptcy Court for the Eastern District of North Carolina is

the 2011 recipient of the Robert B. Yegge Award, which will be presented at the

annual meeting in Toronto on August 4. The Award is given annually to a judge or

lawyer who has made an outstanding contribution to judicial administration in the

United States. Judge Leonard was recognized for his two-decade effort to assist

in developing and overseeing the electronic case filing and public access systems

of the federal courts, his pioneering program to make the digital audio recordings

of federal court proceedings available to the public over the Internet, his efforts

at training and educating court officials and attorneys in the U.S. and abroad, his

chairmanship of the current task force to assist in the design of the next

generation of federal case management systems, and his editorship of the

American Bankruptcy Law Journal. The Award is made possible by an endowment

from the family of Dean Emeritus Robert B. Yegge of the University of Denver Law

School, a national pioneer in the field of judicial administration.

Judge Leonard has spent his career in the federal courts in eastern North

Carolina. He began in 1979 as the Clerk of Court for the United States District

Court, became a United States Magistrate Judge in 1981, and joined the United

States Bankruptcy Court in 1992 where he served as chief judge from 1998-2005.

In 1995, President Clinton nominated him for a seat on the United States Court of

Appeals for the Fourth Circuit, but his confirmation was blocked by Senator


A native of Welcome, North Carolina in Davidson County, he graduated

from the University of North Carolina, where he was a Morehead Scholar, and

Yale Law School. Judge Leonard is the father of five children, and is married to Dr.

Whitney Cain, an associate professor of psychology at Peace College.

Debt collectors calling? Know your rights

By North Carolina Attorney General Roy Cooper

During the economic downturn, job loss and other hardships have caused many families to fall behind on their bills. No matter the circumstances, most consumers dread the thought of a debt collector calling to ask about an unpaid debt or overdue bill.

The NC Attorney General’s office hears from hundreds of consumers each year about how they were treated by a collection agency or how frequently they were contacted about a debt. Complaints about debt collectors ranked fifth among all consumer complaints my office received last year.

Once you fall behind on a debt, your creditor may turn your account over to a debt collector. It’s your responsibility to pay what you owe on time, but debt collectors must follow rules that protect you from abusive practices. In North Carolina, these laws apply to creditors collecting their own debts as well as third party debt collectors.

Debt collectors may not:

* Harass you, use profanity, or threaten you with violence.
* Tell you that you will be arrested if you don’t pay your debts.
* Pretend to be attorneys or government representatives.
* Tell your employer or others about your debts.
* Pretend that they are contacting you for reasons other than to collect a debt.
* Contact you before 8 AM or after 9 PM unless you agree.

Debt collectors are allowed to contact you:

* In person, or by mail, telephone, or fax.
* At home, between the hours of 8 AM and 9 PM.
* At work, unless they have a telephone number to reach you during non-working hours. Debt collectors must stop calling you at work if they know that your employer disapproves of the calls.
* Through people who know you, if they’re unable to find you. When a collection agency contacts people you know, they are not allowed to say why they are trying to contact you or how much you owe.

To stop a collection agency from contacting you at home or at work, put your request in writing. Send a letter by certified mail telling the debt collector to cease phone contact with you both at your home and your job. Be sure to keep a copy of the letter for your records. Once they get your letter, they may not contact you again except to tell you that a creditor intends to take some specific action on your account.

If a debt collector starts calling about a debt that isn’t yours, it could mean that the debt collector has the wrong information or that someone has stolen your identity and used it to open accounts in your name. If the debt isn’t yours, inform the debt collector immediately and ask for proof that you owe the debt. Also, check your credit report regularly to make sure that you haven’t become a victim of identity theft. You can get a free copy of your credit report by calling 1-877-322-8228 or visiting

For more help and advice about identity theft, or to file a complaint about a debt collector who refuses to follow the rules, contact the North Carolina Attorney General’s Consumer Protection Division at 1-877-5-NO-SCAM toll-free in North Carolina or online at