Bank of America, as part of a settlement it and other large banks made with state and federal regulators earlier this year, is offering about 200,000 homeowners significant mortgage debt relief through principal forgiveness on their home loans.

The average amount of principal forgiveness being offered is about $150,000, said Ron Sturzenegger, an executive at Bank of America. “And when you take their new principal amount times their new interest rate, it’s about a 35 percent savings from what they were paying before,” Sturzenegger said (“Bank Of America Offers To Cut Mortgage Principal,” NPR, May 8, 2012).

Only a small group of Bank of America’s borrowers qualified for the one-time offers, which are scheduled to arrive in the mail this week:

• They must owe more than their home is worth
• They must be at least two months delinquent on their mortgage payments as of the end of January
• Eligible mortgages must be held and serviced by Bank of America or by investors who authorized the bank to change the terms of its loans

However, Sturzenegger said he’s concerned that some homeowners, already wary of calls and mailings concerning their home loans, will ignore Bank of America’s one-time offer at principal forgiveness.

Many homeowners with Bank of America and other lenders have participated in loan modification programs, only to be kicked out in worse shape than they were before. And other homeowners may be wary of scammers targeting underwater homeowners for bogus debt relief services.

“And so [Bank of America’s homeowners] have become defensive and they have not responded,” Sturzenegger said. “We would like for them to know this one is different. I don’t want to say this is their best last chance, but I think it’s the best chance they’ve had so far.”

Bank of America said that homeowners who don’t qualify for the principal forgiveness offer may still apply for what the lender calls “dignified alternatives,” which are programs that allow homeowners to modify their loans without principal forgiveness or lease back their homes from the bank.

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A housewife from Wheeling, W. Va. who fought back against an allegedly abusive debt collector that harassed her and threatened her sexually over a debt she says she didn’t owe has won a $10 million judgment against the company, the largest ever against a debt collection firm.

It all started two years ago when Diana Mey got a call from debt collection firm Reliant Financial Associates, who threatened to put a lien on her home. Not only was the tactic a violation of federal and state fair debt collection laws, but the debt in question wasn’t even Mey’s. So Mey sent the company a cease-and-desist letter.

Exactly 23 minutes after Reliant Financial Associates signed for the letter, Mey began receiving a series of hang-up calls that showed up on her caller ID as coming from the local sheriff’s department. When she finally answered, a man on the other end responded with a vulgar, two-minute message.

“You’ve been really trying to get a hold of me, called quite a bit the last couple days,” Mey told the caller when she answered. “Yes,” the man replied. “I want to make sure you like being gang banged” (“West Virginia Woman Wins $10M Judgment From Abusive Debt Collector,” WPXI-TV, May 2, 2012).

Mey said she was frightened by the call and contacted police. A detective told her that the call didn’t come from the sheriff’s department and that the caller ID had been manipulated in a practice called spoofing. When she suspected the call may have come from Reliant Financial Associates, she did some research online and found that she wasn’t the only one that this had happened to.

Mey sued Reliant Financial Associates and won a $10 million default judgment against the debt collection firm — a record judgment against a debt collector — when its lawyer failed to show up in court. Neither the company nor its lawyer have been heard from since.

Although the company’s owners have been identified, collecting on the $10 million judgment may be a long shot. But Mey said that that her lawsuit wasn’t about the money. Instead, Mey said her lawsuit was about sending a message to other abusive debt collectors that they have to obey the law because there are people who will stand up against them.

And abusive companies might want to take notice, because Mey has a history of successfully fighting back. In 1999, Mey won a class-action lawsuit against a telemarketer who kept calling even after she asked it to stop.

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Some people don’t always make the best decisions when it comes to credit cards. If you’re one of these people, you could end up with so much credit card debt that you might have to consider getting help from a professional debt relief company. We know this isn’t necessarily easy to hear, but sometimes tough love is needed to shake debtors by their lapels and get them to understand that they need to make some fundamental changes with their finances in order to avoid more serious problems later on.

Before things get that bad, however, there are five ways you can check to see if your credit cards pass the stress test. If you fail any one of these tests, you should probably rethink how you use your credit cards, before you end up in over your head with debt.

1. Are you operating close to your credit limit?

If any of your credit cards are maxed out or near their credit limit, then you’re operating in the credit stress zone. Cut back on your spending immediately and take your credit cards out of your wallet and put them someplace safe so you can’t use them on impulse and overspend when you’re out and about. Remember, every time you use a credit card, you’re taking out a loan. If you can’t afford something with cash, you can’t afford it.

2. Do you open new lines of credit to get discounts and other offers?

If you’re signing up for credit card accounts — especially store credit card accounts — to get a discount off your first purchase, a low introductory APR, free airline miles, or some other kind of offer, your credit stress test will show a big red flag. These offers are known as “teasers,” and they’re designed to do one thing and one thing only: lure you into more credit card debt. Most cards that offer deals are only temporary, as is the case with first-time shopping discounts and introductory APRs, and rewards cards typically charge higher interest rates. If you’re already struggling with credit card debt, resist the temptation to open any new accounts.

3. Are you using credit cards to cover the gap between paychecks?

If you’re living paycheck to paycheck, the worst thing you can do is use a credit card — which is the same thing as taking out a loan — to cover the gap between paydays. If you’re doing this, you’re failing your credit stress test. If you can’t afford your monthly expenses, paying for them with high-interest credit cards will likely only result in paying eve more for the money you spend, on top of things like late payments, over limit fees, or the inability to make a minimum monthly credit card payment at all. And then you’ll be in real trouble.

4. Do you wait until the last minute to make credit card payments?

Waiting until the last minute to make credit card payments is another red flag on your credit stress test because it probably means you don’t have the money you need to pay off your debts. Making eleventh-hour payments because you’re a procrastinator or were busy and forgot is one thing, but hurrying to scrape together enough money to make a minimum monthly payment is a clear indicator that you don’t need to be using credit cards at all. Shelve the credit cards and go the cash-and-carry route to avoid having a credit card heart attack.

5. Are your credit cards declined when you use them?

If you’re getting declined at the cash register when you try to use your credit cards, it’s a major-league failure of your credit stress test. Not only are you operating near your credit limit — which means you’re carrying a high monthly balance — but you obviously don’t know how much available credit you still have. That means you’re simply not paying attention to your finances. And not paying attention to your finances is eventually going to get you into a heap of trouble. Retire your credit cards to a safe place and work hard to pay them off, little by little if you have to, while using only cash to cover monthly expenses.

Credit cards aren’t there to help you pay for things you can’t afford, they’re there to help you more conveniently spend money that you already have — although credit card companies don’t see it that way; they love it when cardholders carry a balance and pay lots of fees. And credit cards aren’t for everyone. Some people have a hard time using them while not over extending themselves and going into deep debt.

If you answered yes to one or more of these five questions, then you’ve either failed your credit stress test or are close to failing it. Our advice? Dump the credit cards, pay them off, and only use them for absolute emergencies if you can’t work out a payment plan when you get into a bind. Not only will your credit stress level improve, but so will yours.

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Accretive Health LLC, one of the nation’s largest medical debt collection firms, has struck out at Minnesota Attorney General Lori Swanson, calling her lawsuit against the company for alleged privacy and debt collection violations “unfounded speculation” and asking a judge to dismiss the complaint.

Swanson, who in Jan. filed a lawsuit against Accretive Health accusing it of violating federal and state privacy and health access laws, released a scathing report last week documenting the company’s overly aggressive tactics for obtaining funds from patients of Minneapolis-based Fairview Health Services.

The report detailed several highly controversial and allegedly illegal tactics, which included working with hospitals to staff emergency rooms with agents who use “stop lists” to demand payment from debtors who seek treatment, even for life-threatening conditions.

Documents released by Swanson also show Accretive Health staffing hospitals with agents, indistinguishable from medical staff members, who take down sensitive information, including patient health information, and ask incoming patients to make a credit card payment. Agents are instructed by upper management to stall patients entering the emergency room until they have agreed to pay a prior balance and, in boiler-room sales fashion, use quotas and threaten agents with termination if they fail to collect.

Overall, Swanson has alleged that Accretive Health may have broken state and federal debt collection laws and may have violated state healthcare law by using aggressive collection tactics that “may constitute a threat to withhold medical treatment” (“Debt Collector Wants MN AG’s Lawsuit Thrown Out,” Twin Cities Business, May 1, 2012).

Debt Collector: AG Can’t Sue Us Because of Similar Legal Action From DOC

In a statement issued Sunday, Accretive Health fired back at Swanson, saying that “the inaccuracies, innuendo, and unfounded speculation that have been part of the Minnesota attorney general’s recent allegations are extensive” and that the lawsuit “includes allegations that are factually baseless and legally indefensible.”

As an example of one of the lawsuit’s supposed inaccuracies, an allegation in Swanson’s’ report that a father was approached for payment prior to his child being provided care was incorrect. According to Accretive Health, a family member had requested financial consultation in advance of treatment and “the father expressed his appreciation for our assistance.”

“Nevertheless, we take any patient’s concerns seriously,” Accretive Health said in a statement. “One of our fundamental principles is that patients should never believe that the critical work we do has interfered with their access to care. We are committed to understanding and addressing any situation where a patient expresses concern.”

Accretive Health slammed Swanson for orchestrating “a nationwide media campaign” against he company rather than litigate the case in a courtroom. Accretive Health hinted that such a campaign was responsible for encouraging Fairview Health Services to terminate its billing contract with the debt collection firm.

In its motion for dismissal, Accretive Health said that since the company has received a consent order from the Minnesota Department of Commerce in February to “address its debt collection practices in Minnesota,” it can’t be sued by Swanson over identical claims.

After Swanson released her report last week, several law firms announced they were filing class-action lawsuits against Accretive Health on behalf of investors in the company, who claim that Accretive Health and its leaders violated securities laws by issuing false and misleading statements about the business and failed to disclose that it was violating state and federal laws, as alleged by Swanson.

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