May 2013 Archives

"You Can Get Approved if Your Spouse Co-signs!"

Many consumers applying for credit have heard this phrase at least once.   Most often, it seems to be heard in the finance offices of car dealerships. Over the years, we’ve met many married clients who have visited auto dealerships with the intent to apply for credit individually.  The desire to apply individually might be for any number of reasons-- the spouses might maintain separate finances or the non-applying spouse might have a poor credit score—every situation is different.  The bottom line, however, is that there is no requirement that spouses apply for credit jointly. If an applicant’s credit score does not meet the creditor’s requirements, the creditor is allowed to request that the applicant obtain a cosigner for the loan in order to be approved.  What the creditor is not allowed to do, however, is require that the cosigner be the spouse of the applicant.  Too often, we hear of lenders returning to the applicant and specifically requesting that their spouse cosign for the loan.  Such a request is unlawful under the Equal Credit Opportunity Act (“ECOA”). ECOA, which was enacted to prevent discrimination in lending decisions, requires lenders to make extensions of credit equally available to creditworthy applicants without regard to:
race, color, religion, national origin, sex, marital status, or age (provided the applicant has the capacity to contract); to the fact that all or part of the applicant's income derives from a public assistance program, or to the fact that the applicant has in good faith exercised any right under the Consumer Credit Protection Act.
A creditor’s requirement that the applicant’s spouse co-sign for the loan violates ECOA because the creditor is making a lending decision based on the marital status of the applicant.  As the consumer, the applicant is entitled to the cosigner of his or her choice, so long as that person is creditworthy.  Any creditor’s representation to the contrary is both false and unlawful under ECOA.

Recent Cases- Rent to Own Collection Practices

On May 14, 2013 we filed two lawsuits concerning the collection and repossession activities of two Rent-to-Own companies. The first of the two lawsuits alleges that, after a consumer had fallen behind on her monthly payments, the employees of a Rent-to-Own company came to the a consumer’s residence while her 15 year old daughter and 19 year old nephew were home alone.  The complaint alleges that when the nephew refused to open the door, the representatives began to pound and bang on the door so loudly that the daughter and nephew were intimidated and the other residents of the apartment complex could hear the commotion and became aware of the outstanding debt. The complaint also alleges that, when the consumer’s nephew called his aunt to inquire about opening the door, she could hear the pounding through the phone lines.  She immediately called the Rent-to-Own store and told them that she was not home and that the occupants of the apartment were children and were not allowed to open the door for anyone when she was not home.  The complaint further alleges that , despite her requests, the Rent-to-Own employees refused to leave and continued to pound on the door.  At one point, one of the Rent-to-Own employees used a racial epithet toward the nephew.  Even after the Rent-To-Own employees left the apartment the consumer’s daughter was afraid to leave for fear that the representatives might be hiding and waiting for her to open the door. The second lawsuit alleges that, after falling behind on his Rent-to-Own payments, Rent-to-Own employees began visiting the Plaintiff’s residence.   The lawsuit alleges that, on at least three occasions, the Rent-to-Own employees banged and kicked on his door repeatedly in an attempt to get an answer. The lawsuit further alleges that when the Plaintiff was not home, the Rent-to-Own employees would visit his neighbors and share information about the outstanding debt, and that, at one point, the Rent-to-Own employees told the Plaintiff’s neighbor that they were going to kick the Plaintiff’s door in if they didn’t speak with him.  The complaint also alleges that the Rent-to-Own employees would call the Plaintiff’s ex-wife to discuss the debt.   Additionally, the complaint alleges that the Plaintiff’s disabled sister was home alone on some of the occasions when the Rent-to-Own employees visited the residence.  She became very frightened by their conduct and believed that someone was trying to break into the home.Both suits seek damages pursuant to the Connecticut Creditor’s Collection Practices Act, the Connecticut Unfair Trade Practices Act, and the Connecticut Rent to Own Statute.  Additionally, one of the lawsuits asserts claims for false imprisonment.

Certified Pre-Owned Cars: Besnoff v. Gene Langan Volkswagen of Connecticut, Inc. and VW Credit, Inc.

We filed a civil action concerning a Certified Pre-Owned Volkswagen against Gene Langan Volkswagen of Connecticut, Inc. ("GLVW") and VW Credit, Inc. ("VWC").  The Complaint, filed in the United States District Court for the District of Connecticut, asserts that Gene Langan Volkswagen
fraudulently and maliciously sold [Plaintiff] a 2010 Volkswagen Jetta (the “Vehicle”) under the description of “Certified Pre-Owned” (“CPO”), even though the Vehicle had previously suffered significant prior accident damage and had been negligently repaired.
The Plaintiff alleges in the complaint that GLVW made affirmative representations of fact concerning the vehicle, specifically that
The sales representative told Plaintiff that the Vehicle was a CPO vehicle and that a CPO vehicle was essentially a new car. [...] The sales representative also told Plaintiff that the Vehicle was in excellent condition and that it had been used as a loaner vehicle for customers who had  dropped their vehicles off at GLVW for service appointments. 
The Complaint further alleges that, following a collision that occurred after Plaintiff had purchased the Vehicle, a local body shop discovered that the Vehicle had prior accident damage.  The body shop determined that the repair work performed on the Vehicle was
 not repaired to industry standard, creating significant safety risks and which would cost Plaintiff significant sums of money to repair.     [...] Specifically, plastic filler was applied to the Vehicle’s frame to conceal structural damage, and an adhesive pad was affixed to the floor of the Vehicle’s trunk to conceal damage and the distortion of the trunk floor panel. 

Plaintiff claims in the complaint that these repairs devalued the Vehicle by approximately $13,000. Plaintiff seeks to recover his damages plus punitive damages and attorney's fees from the defendants.

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