Predatory lending practices chewing up small businesses across America

Look out, the stranger on the phone warned. They’re coming for you.

The caller had Janelle Duncan’s attention. Perpetually peppy at 53, with sparkly jewelry and a glittery manicure, Duncan was running a struggling Florida real estate agency with her husband, Doug. She began each day in prayer, a vanilla latte in her hand and her Maltese Shih Tzu, Coco, on her lap, asking God for business to pick up. She’d answered the phone that Friday morning in January hoping it would be a new client looking for a home in the Tampa suburbs.

The man identified himself as a debt counselor. He described a bizarre legal proceeding that he said was targeting Duncan without her knowledge. A lender called ABC had filed a court judgment against her in the state of New York and was planning to seize her possessions. “I’m not sure if they already froze your bank accounts, but they are RIGHT NOW moving to do just that,” he’d written in an email earlier that day. He described the lender as “EXTREMLY AGGRESSIVE.” Her only hope, the man said, was to pull all her money out of the bank  immediately.

Read on. (Hat tip from Bloomberg)

How Confessions of Judgment Work

 

Small Business

Wants a loan

The Confession

Borrower signs a confession of judgment as part of the application, agreeing to lose any dispute

Lender

Sends money to borrower

The Dispute

Borrower misses a payment, or so the lender claims

County Clerk

Lender sends confession to clerk,

who rubber-stamps it

New York City Marshal

Demands money from borrower’s bank

Bank

Hands money over to lender

Lender

Gets money back, with interest and fees tacked on.

One response to “Predatory lending practices chewing up small businesses across America

  1. Interesting another sign of using predatory lending as excuse for next bailouts. Then again we are dealing with concentric rings of sharks around us!

    Found more great info yesterday ptetty amazing if can put to use

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