World
What Can Be Done Right Now to Fix the Legal System for Debt Collection
America’s out-of-date, unfair laws for collecting debts could be dramatically improved by these simple steps
 
Laws governing debt collection lawsuits and garnishments are often antiquated, poorly thought out and place the burden on debtors to know their rights. Below are ideas for commonsense reforms. 
 
1. Lower How Much Can Be Taken from Debtors’ Wages
 
The federal law limiting wage seizures to 25 percent of after-tax income passed in 1968. Lawmakers appear to have pulled this percentage out of a hat. Some states protect more of a worker’s pay – and four (Texas, Pennsylvania and the Carolinas) prohibit garnishment for most debts – but most allow the federal level. Federal surveys show that low-income workers can’t afford to lose a quarter of their pay.
 
2. Restrict How Much Can Be Taken from Debtors’ Bank Accounts
 
The 1968 federal law is so old that it is silent on the subject of bank account garnishments, which are now a common form of collection for collectors. As a result, a plaintiff can seize no more than a quarter of a worker’s pay, but if that paycheck is deposited into a bank account, the entire amount can be seized.
 
3. Provide Clear Notice to Debtors about Laws That Protect Them
 
When states do provide legal protections for debtors – such as allowing those with children to keep more of their pay under a “head of family” exemption – the burden is typically on the debtor to assert these protections. But there’s frequently no clear notice provided to debtors that the protections exist.
 
4. Limit Attorneys’ Fees to Reflect Actual Work on a Suit
 
When companies sue, they often request an “attorney’s fee,” which is routinely granted and added to the judgment. The fees are usually set at arbitrary, fixed amounts, even though attorneys may spend only a few minutes on a suit. In 2013, we reported that one subprime lender in Mississippi added an attorney fee equal to one-third of the principal balance to each suit, even though the attorney was a company executive.
 
5. Cut Interest on Judgments to a Reasonable Level
 
Under Missouri law, lenders can request that judgments grow at the contracts’ rate of interest. Particularly when high-cost lenders sue, this can result in what one St. Louis judge called a form of “indentured servitude”: A debt can balloon at triple-digit interest even as the debtors’ wages are seized. A $1,000 loan can become a $40,000 debt, forcing the debtor to declare bankruptcy or make payments for a life.
 
6. Improve Enrollment in Programs to Help Low-Income Debtors
 
Some common plaintiffs, such as utility companies and non-profit or public hospitals, have an obligation to serve the public. These sorts of entities often have a program of some kind to help lower-income patients or customers, and yet, as ProPublica has documented repeatedly, debtors often don’t know about these programs.
 

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Saradha scam: Ex-minister's wife Manoranjana sent to CBI custody
Former union minister and Congress leader Matang Sinh's estranged wife Manoranjana -- who was arrested in connection with the Saradha scam -- was on Thursday sent to five days custody of the CBI by a court here.
 
Manoranjana along with Kolkata-based entrepreneur and chairman of the now-defunct Xenitis Group, Santanu Ghosh were arrested by the Central Bureau of Investigation (CBI) on Wednesday for their alleged complicity in the multi-crore-rupee scam.
 
Rejecting their bail plea, the court sent the duo to CBI custody till October 13.
 
According to the CBI, they were "involved in a criminal conspiracy with Saradha group head and scam kingpin Sudipta Sen and misappropriated huge amounts running into crores of rupees".
 
The CBI had arrested Matang Sinh in January and charge-sheeted him for several offences including cheating and criminal conspiracy.
 
The CBI and the Enforcement Directorate had since 2014 been quizzing Manoranjana -- who along with many other high-profile names -- has been accused of complicity in the scam by Sudipta Sen in his 2013 tell-all letter to the CBI.
 
Manoranjana, a former journalist, had allegedly sold her shares in an audio-visual channel to the Saradha Group.
 
She had also purportedly taken Sen to the lawyer-wife of a former union minister for settling a deal, Sen claimed in the letter.
 
Ghosh, said to have made several business transactions with the tainted group, was arrested in June 2014 by the Enforcement Directorate under the Prevention of Money Laundering Act.
 
He was subsequently granted bail in August last year by a city court.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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SC constitution bench to hear Aadhaar card petitions on October 14
The Supreme Court on Thursday said a constitution bench will hear on October 14 a batch of applications, including one by the central government seeking "clarification/modification" of its August 11 order to permit the use of Aadhaar card for availing benefits under social welfare schemes including as an identity proof.
 
The apex court in a brief notice issued on Thursday evening said the constitution bench will take up the petitions challenging the validity of the Aadhaar card scheme on the grounds that it violated the right to privacy.
 
The notice issued by the apex court said: "Take notice that the matter above mentioned (Justice K.S. Puttaswamy (retd) and others) will be listed on 14.10.2015 at 2 p.m. before the constitution bench."
 
Earlier in the day, the central government urged the apex court to constitute a constitution bench to hear its plea to allow the use of Aadhaar card for the disbursal of benefits under various social welfare schemes and also in banking and financial transactions.
 
As Attorney General Mukul Rohatgi asked the bench headed by Chief Justice H.L. Dattu to constitute a larger bench to hear their plea for "clarification/modification" of the August 11 order, the court said it was "very difficult" to constitute a larger bench for an early hearing.
 
Chief Justice Dattu said it was difficult to spare nine judges to hear the plea as it would adversely affect the working of other courts.
 
He also said he would consider the plea by Friday evening.
 
The Attorney General mentioned the matter after the bench of Justice J. Chelameswar, Justice S.A. Bobde and Justice C. Nagappan on Wednesday referred a batch of applications, by the government and other agencies, seeking use of Aadhaar card on a voluntary basis, to a larger bench as it refused to relax its August 11 interim order.
 
The apex court had restricted the use of Aadhaar card for distribution of foodgrain under PDS, supply of kerosene oil and LPG only. 
 
By its August 11 order, the court referred to a larger bench the question whether right to privacy was a fundamental right -- an issue rooted in the conflicting judgments of the apex court.
 
The order referring the matter to a larger bench had come on a batch of petitions including by the former judge of Karnataka High Court Justice K.S. Puttaswamy, who contended that the biometric data and iris scan that was being collected for the issuance of Aadhaar card violated the fundamental right to privacy of the citizens as personal data was not protected, and was vulnerable to exposure and misuse.
 
The apex court by its 1954 judgment by a bench of eight judges and later in 1964 by a bench of six judges had held that the right to privacy was not a fundamental right but from 1975 onwards, the smaller two or three judges' bench elevated the right to privacy as a fundamental right.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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