With the fall of the economy, there appears to be a rise of debt collector employees using threatening tactics to collect debts from sometimes unsuspecting people. They might pose as lawyers to scare and bully people into paying debts that sometimes they don’t even owe.

Not only do people have to live in fear of bankruptcy and losing jobs and homes, but now collectors might be harassing not just people who owe money, but also people who don’t.

According to CNN.com, it is against Federal and New York law for debt collection agencies to lie and threaten people in order to collect money.

New York Attorney General Andrew Cuomo is trying to shut down these agencies supposedly run by the Benning-Smith Group. This group allegedly posed as law enforcement officials and lawyers to threaten people into paying debts.

Supposedly these agencies are buying debt from existing corporations and attempting to make collections. In some instances the people they called had no idea they even owed any debt, and in fact, they may not.

People who have been harassed have paid so the collectors will leave them alone. Michele Milton is one of many who did just that.

When Michele received a phone call at her Springville, N.Y. home, she was not expecting the voice on the other end to threaten her with arrest if she did not pay the money she apparently owed. The man said he was a lawyer looking to collect the debt she needed to pay, and if she did not pay then she would be arrested and child services would take the kids.

Before she knew it, she had told the man her bank account number in hopes she would not be arrested. She later learned the man was not a lawyer but an employee of a debt collection agency.

In other alleged cases, debt collector employees threatened sexual assault on a family’s daughter and in a separate case requested sex acts in exchange for paying off debts. Some people owed nothing but out of fear of these threats – they paid.

Another alleged instance of harassment was Dorothy Gilbert. She said she received threatening calls stating she was “totally ghetto” and that she should “learn English [AND] get an education,” and the collector was requesting she pay a debt that she already paid.

CNN states more than 850 complaints have been filed against the group making these calls. The attorney general’s office, the Federal Trade Commission and the Better Business Bureau are all seeing the complaints. According to the attorney general, he will try to recover money for the people who didn’t owe, but paid anyway.

A surprising study by the Mortgage Asset Research Institute has revealed that while the number of new mortgages originated has declined significantly over the past couple of years, the incidence of fraud by loan officers is still on the rise.  The general consensus has been that the majority of the dishonest lenders and brokers and washed out of the industry in the recent decline, either taking their money and getting out as the tide started to turn or getting caught up in the wave of layoffs and corporate bankruptcies among exotic mortgage lenders.

Now, the New York Times is reporting that there appear to be more bad apples left than previously suspected.  In fact, in the second quarter of 2008, fraud by loan officers was up 45% over the previous year.  While one analyst has suggested that some of these fraudulent activities might actually have occurred earlier, but not come to light until regulation began to tighten up, Jennifer Butts of the Research Institute offers another explanation: those who didn’t get weeded out have fewer transactions on which to make a profit these days, and so they’re just a little bit more desperate.

The bottom line, for consumer purposes, is clear:  Don’t assume that the mortgage industry is clean now, or that regulation has made it safe to take the lender’s or broker’s word on faith.

A TransUnion study shows that in the third quarter of 2008, 3.96% of U.S. mortgages were classified as “severely delinquent”.  That’s nearly double the historical level and up from 2.56% a year earlier–when the foreclosure crisis already appeared to be in full swing.   And TransUnion doesn’t think it’s over, projecting that severe delinquencies may reach 4.7% by the end of 2008.

That’s due in part to declining home values; residential real estate values are, on average, down 25% from their peak levels–and there’s more bad news in that arena, too.  Oppenheimer’s Meredith Whitney suggests that home values will fall another 20% as mortgage funds become less available.  Whitney projects that over the coming months, we’ll see a decrease in availability of home mortgage credit as the major banks tighten their belts…and that may not be the end of the belt tightening.  Whitney also projects that consumer access to credit card lines of credit will be severely limited, and not just in terms of obtaining new credit.  She believes that as much as $2 trillion in consumer credit will be eliminated through the closing of accounts or reduction of credit lines, as banks try to limit losses.

If Whitney’s projections hold true, we could see a 45% decline in credit available to consumers over the next two years.

The U.S. unemployment rate has just hit a 14-year high after the economy lost another 240,000 in October. Businesses have resorted to slashing jobs after consumers have slowed down swiping their credit cards and forking over cash.

The rate is now at 6.5 percent, the highest percentage since 1994. Many financial analysts expect the unemployment rate will reach 8 percent by the same time next year. In total, the United States has lost 1.2 million jobs since January of this year. Half of those job losses have happened in the last three months.

If you’ve lost your job or having a hard time paying bills, filing bankruptcy may be a debt-relief option for you. Consider talking to a bankruptcy lawyer today. Total Lawyers has a wide network of bankruptcy attorneys ready to listen to you.

Yesterday, disbarred Florida lawyer Graham Kligerman was sentenced to 10 years in federal prison for his role in a fake mortgage foreclosure rescue scheme.

The 34-year-old lawyer is accused of being the closing agent on 57 fraudulent real estate transactions. Banks were deceived into making millions in loans. Worse, homeowners facing foreclosure, who turned to Kligerman to save their homes, actually lost their homes.

Kligerman, who pleaded guilty to wire fraud and conspiracy to commit bank, wire and mail fraud, was also ordered to pay $6.5 million in restitution payments to all the loan processors, homeowners, banks and homebuyers who were cheated by his con.

His defense lawyers argued that his deceptive behavior stemmed from mental illness and the desperation of a failing law practice—not greed. The said that Kligerman only kept $150,000 of the diverted equity and gave the rest to his law clients.

“This court is seeing too many of these types of cases,” the presiding judge said. “There are victims out here who have lost their homes. You should be down on your knees begging for these people to forgive you and do something tangible to make up for what has happened to them. They’re hurting and you’re living comfortably—What’s wrong with that picture?”

Kligerman was disbarred in 2005 after he fabricated court documents, faked a judge’s signature and diverted money to a client from one of his personal trust accounts while pretending it was a payment from defendants.

“I live with regret every day,” Kligerman told a reporter. “To anybody who was hurt, and I know there were many of them, I apologize.”

Mortgage foreclosures are at an all-time high. If you are nearing or facing mortgage foreclosure, be careful who you turn to for help. Like Kligerman, there are many predatory people out there looking to cheat homeowners who are desperate to save their homes.

Consider talking with a bankruptcy lawyer. A Chapter 13 bankruptcy repayment plan has helped thousands of Americans save their homes from foreclosure and get set up on a realistic repayment plan to better manage their debt.

With the economy in such turmoil, times are tough for everybody—even lawyers. Layoffs at law offices are rare but becoming somewhat of a trend as income dwindles.

A Chicago law firm laid off 24 defense lawyers out of its 680 staff and another firm let go of 21 defense attorneys out of their stock of 650, according to a Chicago Tribune story.

But don’t worry—if you’re looking for a lawyer, we have an extensive network and nobody’s going anywhere!

Total Lawyers can help you if you’re looking for a:

• Bankruptcy Lawyer
• Criminal Defense Lawyer
• Personal Injury Lawyer
• DUI Lawyer
• Divorce Lawyer
• Family Law Lawyer
• Estate Layer
• Lemon Law Lawyer

I’m not sure I’ve ever linked to a site that billed itself as a “tabloid” before, but some things have to be seen to be believed, and Above the Law was good enough to post a copy of the court transcript in which an attorney from a 70-year-old law firm with more than 1000 attorneys in multiple countries apparently told the judge “with respect”, that she was a few fries short of a happy meal.

She responded with a show-cause order requiring the attorney to appear and show cause why he shouldn’t be suspended from practice before her court.  That hearing is scheduled for June 25; we’ll keep you posted.

If you’re a consumer bankruptcy lawyer or a consumer who has filed for bankruptcy protection in the past year and a half…or a counselor for a credit counseling agency…it will probably come as no surprise to you that a recent GAO study raised some questions about the usefulness of the pre-bankruptcy filing credit counseling requirement.

It isn’t that credit counseling can’t be useful, but that the requirement that someone planning to file for bankruptcy protection complete a credit counseling briefing doesn’t kick in until that person sets out to file bankruptcy.  By that time, circumstances are usually dire, and credit counseling agencies have indicated that most people who come to them at that point have no realistic options outside the bankruptcy process.

Don’t look for any changes in the near future, though; the report only recommended tracking outcomes for those completing credit counseling in anticipation of bankruptcy.  The study found that the post-filing, pre-discharge debtor education course was helpful.

Four and a half months after the end of 2006, the Administrative Office of the Courts has released bankruptcy filing statistics for the fourth quarter of 2006 and, thus, for the first full calendar year since the dramatic changes to the bankruptcy code in 2005.

To no one’s surprise, filings have decreased.  However, what may be more telling is the rate at which filings have INCREASED since almost immediately after the law change took effect.   First quarter filings in 2006–the first full quarter after the law change took effect–reached only 116,771.  However, one year later, first quarter filings reached 186,788.