The Watchdog: Texas bankruptcy judge fines Ally Financial

The opinions of Texas bankruptcy judges aren’t usually important to anyone other than anxious debtors and long-faced creditors. But a recent ruling by a federal judge in Dallas deserves wider attention.

U.S. Bankruptcy Judge Stacey G.C. Jernigan writes in plain language that she believes Ally Financial Inc., the nation’s top auto finance company, violated federal bankruptcy rules designed to protect debtors.

As readers of The Dallas Morning News Dave Lieber Watchdog column first learned, she accuses the lender of improperly harassing debtors who’ve filed bankruptcy to get them to pay off a debt they no longer owe. After seeing evidence and hearing testimony, she concludes that Ally routinely sent form letters designed to confuse debtors in the hope of picking up extra monthly payments.

The judge cites testimony from an Ally official that the company has sent these improper letters for five years. She questions the company’s “ulterior motive” and states she believes the process is designed to force people into paying when they shouldn’t — a practice she calls “unacceptable.”

The judge can’t do anything outside her jurisdiction, but she prohibits Ally from sending these letters to anyone living in the court’s Northern District of Texas.

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Bankruptcy Judge Stacey Jernigan

She also orders Ally to pay the recipient of the letter $11,000.

The judge declined to talk to me for this Watchdog report.

ally

Ally spokeswoman Susan Fitzpatrick offers limited comment to The Watchdog: “While Ally disagrees with some of the language in the ruling, we respect the court’s decision and have paid the damage award to the plaintiff. It is important to note that Ally’s process complies with all bankruptcy requirements.”

Ally slipped past Toyota Motor Credit Corp. this year to become the nation’s top auto lender. The company edged Toyota by only one-tenth of a percent with $67 billion in outstanding loans and leases, according to AutoFinanceNews.net.

The bankruptcy case involves a Balch Springs woman’s filing that included a Silverado truck, actually in the possession of the woman’s estranged husband.

Ally was notified of the bankruptcy and the company was listed as a creditor. But two months after the 2013 filing, Ally sent Tequilla Marie Law a letter with the words “AMOUNT NOW DUE” and “LAST DAY FOR PAYMENT” on the account.

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“You are late in making your payment(s),” it warned. The amount cited as owed was $6,000 (although the actual balance was $12,000).

The unsigned letter from Ally acknowledges her bankruptcy but warns she should pay or “we may take the vehicle.”

The letter’s warning language, the judge writes, is “subtle and troubling.”

“The court is left with the uncomfortable concern for how many other debtors have received similar letters and sent in payments to Ally, thinking they better do it to avoid trouble with Ally …

“This may have been the precise business strategy of Ally,” the judge writes. “Send the letter and maybe the debtor will send in a payment.”

While some sophisticated debtors would understand they do not have to pay, most would get confused by bankruptcy terms and “legal nuance,” the judge writes.

Aside from paying damages, Ally was ordered by the judge to pay legal fees to the winning lawyer, John J. Grieger Jr. of Legal Aid of NorthWest Texas in Dallas.

No one from Ally testified on behalf of the company at one hearing, causing a scolding from the judge. When the judge demanded to know more, Ally responded in writing that the letters go to “every debtor” who has completed bankruptcy, who has an account more than 50 days past due, and who is not in possession of their vehicle.

In follow-up testimony, an Ally official said use of the letters began in 2008. That’s what the judge had feared, and that’s what she tries to stop in her ruling, at least in North Texas.

“Hopefully,” the judge writes, “this will serve as a cautionary tale.”

Staff writer Marina Trahan Martinez contributed to this report.

Follow Dave Lieber on Twitter at @Dave Lieber.

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Watchdog Video Tip of the Day: Deal with a bad landlord

What do you do when you have a shoddy landlord?

The Dallas Morning News Watchdog columnist Dave Lieber has a solution.

The Watchdog Video Tip of the Day, produced by DallasNews.com, is designed to solve a problem in less than a minute. Learn more about how to protect yourself at The Watchdog page at the Dallas Morning News.

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Watchdog Video Tip of the Day: How to get open records

When a governmental body won’t share information you’re entitled to, what do you do?

Learn how to get open records from The Dallas Morning News Watchdog Desk administrator Marina Trahan Martinez.

Read more Watchdog reports designed to save you time, money and aggravation at The Watchdog Page.

The Watchdog Video Tip of the Day, produced by DallasNews.com, is designed to solve a problem in less than a minute.

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Are you tired of fighting the bank, the credit card company, the electric company and the phone company? They can be worse than scammers the way they treat customers. A popular book, Dave Lieber’s Watchdog Nation: Bite Back When Businesses and Scammers Do You Wrong, shows you how to fight back — and win! The book is available at WatchdogNation.com as a hardcover, CD audio book, e-book and hey, what else do you need? The author is The Watchdog columnist for The Dallas Morning News. Visit our store. Now revised and expanded, the book won two national book awards for social change. Twitter @DaveLieber

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The Watchdog: Be careful of hucksters at a state fair

Kim Crossley of Keller glides through the State Fair of Texas with a skeptical eye and a hand on her purse. She won’t fall for any midway fakery or crazy creams or signs that promise everything but deliver very little.

Good thing. Kim won one of the Dallas Morning News Facebook contests to go to the fair with a newspaper staff member.

First prize? She goes to the fair with The Watchdog. (Not my idea, but I’m game.)

The first unofficial Watchdog Day at the State Fair. The one and only!

The winner could have been a sucker, falling for every come-on there is.

Instead, this contest-winning mom, who runs her own business and brings her college-age daughter Carrie with her, is a natural watchdog. She sees. She questions. She moves on. I like her.

“Why do mattresses come with 25-year warranties when they recommend you buy one every eight years?” she asks at the Embarcadero at the very first sales exhibit we see, a mattress gallery. “Replace Every 8,” a sign says, but yet …

A step or two away, the next offer comes — a San Antonio trip, two nights in a Riverwalk hotel (“Buy now, travel later”), river boat tickets and more. $99. Oh, there’s a catch, a salesman says. A 90-minute sales presentation to learn “what Wyndham has to offer.” See ya.

She pushes past “Clean Your Shower with No Scrubbing” and “Lower Your Cholesterol with Greaseless Frying.” She turns a corner and makes eye contact with a woman hawking an all-natural cleanser.

“Let me show you something,” the hawker says into her headset microphone.

Kim Crossley and friend at Texas State Fair

Kim Crossley and friend at Texas State Fair

Kim moves in close. She watches the lady with the microphone spill, dab and rub. Kim looks at the label. There’s no listing of biodegradable ingredients. “What’s in it?” she asks. The woman is three feet away. But the answer comes in an amplified shout, “COCONUT OIL AND SEAWEED KELP!”

Turn around and listen. From every direction, there’s more of the same.

Someone making promises into a headset microphone. Late-night infomercials come to life. A cacophony of Big Tex chaos. Stretch lids. Ultra vitamins. Skin wrinkle removers.

The sign says “BOTOX.” The letters are big. In tiny print underneath, it adds “Effect.” Kim snorts her dismay. The salesman defends, “You’re never going to know if something works unless you try it.”

“Does it last?” she asks.

“If you do it every two days, it lasts,” the salesman says. She snorts again.

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She sees the Bionic Band display. Helps back pain, numbness, poor circulation, carpal tunnel, arthritis, sleeping disorders, attention deficit disorder and much more, the signs says. The multicolored bands in shapes and sizes are alluring. The salesman seems quite sharp. But Kim’s eyes wander to small print on the bottom of a display sign. The words are partially obscured by a lamp.

“These products have not been evaluated by the FDA. These products are not intended to diagnose, treat, cure, or prevent any disease or illness. Individual results may vary.” She bolts.

More signs. “Lose Fat. No Hunger!” “Soft Cotton Dream Sheets, Feels Like Egyptian Cotton.” “The Lamp That Can Change Your Life.”

“Do you need windows?” a man asks. Another asks her to fill out a coupon.

Win a 1967 Camaro.

“Who are you with?” she asks.

“Silverleaf Resorts.”

“They bug you to death with phone calls and emails,” she says. Bye bye.

She walks along the midway, where it’s a different kind of sale. The rhythmic words are hypnotic.

“Come on. Don’t be shy.”

“Two credits to play, two credits to win.”

“Always a winner, always a prize.”

“Come on up, come on in.”

“Winner gets any prize, any size.”

She scoots past a basketball game with the deceptively small rims, ignores a man with gold teeth offering her a baseball to toss.

At my urging only, she lines up at Scooby ring toss. “I’ll show you how to win,” the man behind the counter says. He shows. She tosses. Lots of clinks.

Not one solid clank.

The worker offers her extra advice. Lady, when the other countermen scan your game tickets, make sure they punch in the right number of credits.

“They ain’t crooked,” he says of his colleagues. “Just some of the boys — you got to watch ’em.”

Her daughter sets up at the water pistol shooting gallery. The kid strikes a pose. “Aim. Set. Shoot.” She points a straight line into the clown’s mouth.

The kid wins. Heck, somebody does. She chooses the appropriate prize for Watchdog Day at the State Fair. A giant wolf.

How come? Because at this wonderful place, a sheep can easily get slaughtered.

[This story originally appeared in the Dave Lieber Watchdog column at The Dallas Morning News. Staff writer Marina Trahan Martinez contributed to this report.]

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Are you tired of fighting the bank, the credit card company, the electric company and the phone company? They can be worse than scammers the way they treat customers. A popular book, Dave Lieber’s Watchdog Nation: Bite Back When Businesses and Scammers Do You Wrong, shows you how to fight back — and win! The book is available at WatchdogNation.com as a hardcover, CD audio book, e-book and hey, what else do you need? The author is The Watchdog columnist for The Dallas Morning News. Visit our store. Now revised and expanded, the book won two national book awards for social change. Twitter @DaveLieber

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Watchdog Video Tip of the Day: What to do when employer won’t pay you

What do you do when you work and your employer won’t pay you on time? The Dallas Morning News Watchdog Desk Administrator Marina Trahan Martinez has the answer.

The Watchdog Video Tip of the Day, produced by DallasNews.com, is designed to solve a problem in less than a minute. Read more interesting Watchdog reports that show you how to be a smart consumer at our main Watchdog page here.

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Are you tired of fighting the bank, the credit card company, the electric company and the phone company? They can be worse than scammers the way they treat customers. A popular book, Dave Lieber’s Watchdog Nation: Bite Back When Businesses and Scammers Do You Wrong, shows you how to fight back — and win! The book is available at WatchdogNation.com as a hardcover, CD audio book, e-book and hey, what else do you need? The author is The Watchdog columnist for The Dallas Morning News. Visit our store. Now revised and expanded, the book won two national book awards for social change. Twitter @DaveLieber

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Watchdog Video Tip of the Day: How to fight when your car gets towed

A tow truck drags your car away. You want to fight it, but how? Here’s one way from The Dallas Morning News Watchdog Desk Administrator Marina Trahan Martinez.

The Watchdog Video Tip of the Day, produced by DallasNews.com, is designed to solve a problem in less than a minute.

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Dave Lieber's Watchdog Nation won a 2013 writing award from the National Society of Newspaper Columnists

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Are you tired of fighting the bank, the credit card company, the electric company and the phone company? They can be worse than scammers the way they treat customers. A popular book, Dave Lieber’s Watchdog Nation: Bite Back When Businesses and Scammers Do You Wrong, shows you how to fight back — and win! The book is available at WatchdogNation.com as a hardcover, CD audio book, e-book and hey, what else do you need? The author is The Watchdog columnist for The Dallas Morning News. Visit our store. Now revised and expanded, the book won two national book awards for social change. Twitter @DaveLieber

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Watchdog Video Tip of the Day: What to do when your warranty expires and your problems remain

Watchdog Video Tip of the Day: What do you do when your contractor is gone but problems remain?

The contractor you selected was good, but now he’s gone out of business and your roof is leaking. Are you out of luck with your warranty?

Maybe. Maybe not, says Marina Trahan Martinez, The Dallas Morning News Watchdog Desk Administrator.

The Watchdog Video Tip of the Day, produced by DallasNews.com, is designed to solve a problem in less than a minute. 

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Dave Lieber's Watchdog Nation won a 2013 writing award from the National Society of Newspaper Columnists

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Twitter @DaveLieber

Are you tired of fighting the bank, the credit card company, the electric company and the phone company? They can be worse than scammers the way they treat customers. A popular book, Dave Lieber’s Watchdog Nation: Bite Back When Businesses and Scammers Do You Wrong, shows you how to fight back — and win! The book is available at WatchdogNation.com as a hardcover, CD audio book, e-book and hey, what else do you need? The author is The Watchdog columnist for The Dallas Morning News. Visit our store. Now revised and expanded, the book won two national book awards for social change. Twitter @DaveLieber

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Subject of Watchdog Nation report convicted of theft

Malachi Crump, subject of a previous Watchdog Nation report, has been convicted in New Orleans of stealing more than $100,000 from families who sought to rebuild their homes destroyed in Hurricane Katrina.

Crump, 64, was found guilty in November 2013 on three counts of felony theft, one for each family he swindled, the New Orleans Advocate reports.

Crump, on parole and never licensed in Louisiana, owned Chimere’s Builders. He signed contracts with three elderly women promising to completely renovate their homes. They gave him thousands in down payments and some wrote additional checks for supplies, according to published reports. Authorities say he did some work at some houses and nothing at others. When the homeowners began asking questions, he disappeared.

Watchdog Nation first reported Crump’s similar activities in Texas. Read that Watchdog Nation report on Malachi Crump here.

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Malachi Crump

Malachi Crump

 

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Watchdog Video Tip of the Day: How to get your free credit report

Watchdog Video Tip of the Day: How to get a free credit report. 

Don’t fall for a scam from companies that promise free credit reports but force you to sign up for paid subscriptions. (Hint, hint: One advertises on TV commercials that it’s free but it’s not.)

Learn from Marina Trahan Martinez, The Dallas Morning News Watchdog Desk Administrator, how to be smart.

The Watchdog Video Tip of the Day, produced by DallasNews.com, is designed to solve a problem in less than a minute. 

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Dave Lieber's Watchdog Nation won a 2013 writing award from the National Society of Newspaper Columnists

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Are you tired of fighting the bank, the credit card company, the electric company and the phone company? They can be worse than scammers the way they treat customers. A popular book, Dave Lieber’s Watchdog Nation: Bite Back When Businesses and Scammers Do You Wrong, shows you how to fight back — and win! The book is available at WatchdogNation.com as a hardcover, CD audio book, e-book and hey, what else do you need? The author is The Watchdog columnist for The Dallas Morning News. Visit our store. Now revised and expanded, the book won two national book awards for social change. Twitter @DaveLieber

AVAILABLE IN HARDCOVER, CD AUDIO BOOK, ON ITUNES (AUDIO), KINDLE AND IPAD.

Watchdog Video Tip of the Day: How to sell your treasured heirlooms

Watchdog Video Tip of the Day: How to sell your treasured family heirlooms. 

Learn from Marina Trahan Martinez, The Dallas Morning News Watchdog Desk Administrator, how to be smart when selling sentimental keepsakes.

The Watchdog Video Tip of the Day, produced by DallasNews.com, is designed to solve a problem in less than a minute. 

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More Watchdog Nation News:

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Dave Lieber's Watchdog Nation won a 2013 writing award from the National Society of Newspaper Columnists

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Are you tired of fighting the bank, the credit card company, the electric company and the phone company? They can be worse than scammers the way they treat customers. A popular book, Dave Lieber’s Watchdog Nation: Bite Back When Businesses and Scammers Do You Wrong, shows you how to fight back — and win! The book is available at WatchdogNation.com as a hardcover, CD audio book, e-book and hey, what else do you need? The author is The Watchdog columnist for The Dallas Morning News. Visit our store. Now revised and expanded, the book won two national book awards for social change. Twitter @DaveLieber

AVAILABLE IN HARDCOVER, CD AUDIO BOOK, ON ITUNES (AUDIO), KINDLE AND IPAD.

Marina