Debt settlement companies are for-profit companies that claim that they can eliminate consumers’ debts by negotiating settlements with creditors that are a fraction of the consumer’s outstanding debt. If you watch television these days, their advertisements show up as often as those for drug companies. Many of these companies accomplish very little for consumers while charging exorbitant fees and make empty promises that leave consumers in worse financial state then when they began.
These debt solution companies prey on desperation, offering false hope and no help, often driving these consumers even further into debt and ruining their credit.
Some debt solution companies advise consumers to do one of the following:
1. Stop paying debts
The Problem: this causes customers to face unforeseen late fees, additional interest, increased collections attempts, and even lawsuits by their creditors.
2. Stop paying debts and, instead, to place money into savings account so that enough money will accumulate to allow a settlement offer to be made to any creditors.
The Problem: The debt settlement companies’ saving plans are often extremely unrealistic, so that the promised negotiated settlements do not occur, but the debt settlement companies’ still take their fees.
Also, the debt settlement plans are generally premised on consumers aggregating savings, over one to three years, from which both the payment of the company’s fees and any negotiated settlement are to be made. Yet most consumers who are targeted by these companies are unable to meet the savings requirements because of their precarious financial situation.
3. Ignore collection efforts or refer those efforts to the debt settlement company.
The Problem: it doesn’t work and consumers continue to find themselves subject to creditors’ collection efforts, including lawsuits, and consumers’ credit histories are further damaged when the consumers stop paying debts.
4. Seek additional sources of funds through means such as selling their blood plasma, mowing lawns, cutting down on car insurance and borrowing from their neighbors and church.
The Problem: Even for those consumers who can meet the requirements set out by a plan, their amount of aggregated savings is ordinarily insufficient to settle their debts. As a result, many consumers find themselves worse off financially because of these debt settlement plans.
I suspect that much litigation will arise against debt settlement companies who engage in this type of conduct.To read more about the actions being taken by the New York Attorney General, see here (http://www.oag.state.ny.us/media_center/2009/may/may19b_09.html)
Chris Hellums may be contacted at ChrisH@PDKHLAW.com
Friday, May 29, 2009
Debt Solutions companies under attack by authorities
Debt settlement companies are for-profit companies that claim that they can eliminate consumers’ debts by negotiating settlements with creditors that are a fraction of the consumer’s outstanding debt. If you watch television these days, their advertisements show up as often as those for drug companies. Many of these companies accomplish very little for consumers while charging exorbitant fees and make empty promises that leave consumers in worse financial state then when they began.
These debt solution companies prey on desperation, offering false hope and no help, often driving these consumers even further into debt and ruining their credit.
Some debt solution companies advise consumers to do one of the following:
1. Stop paying debts
The Problem: this causes customers to face unforeseen late fees, additional interest, increased collections attempts, and even lawsuits by their creditors.
2. Stop paying debts and, instead, to place money into savings account so that enough money will accumulate to allow a settlement offer to be made to any creditors.
The Problem: The debt settlement companies’ saving plans are often extremely unrealistic, so that the promised negotiated settlements do not occur, but the debt settlement companies’ still take their fees. Also, the debt settlement plans are generally premised on consumers aggregating savings, over one to three years, from which both the payment of the company’s fees and any negotiated settlement are to be made. Yet most consumers who are targeted by these companies are unable to meet the savings requirements because of their precarious financial situation.
3. Ignore collection efforts or refer those efforts to the debt settlement company.
The Problem: it doesn’t work and consumers continue to find themselves subject to creditors’ collection efforts, including lawsuits, and consumers’ credit histories are further damaged when the consumers stop paying debts.
4. Seek additional sources of funds through means such as selling their blood plasma, mowing lawns, cutting down on car insurance and borrowing from their neighbors and church.
The Problem: Even for those consumers who can meet the requirements set out by a plan, their amount of aggregated savings is ordinarily insufficient to settle their debts. As a result, many consumers find themselves worse off financially because of these debt settlement plans. I suspect that much litigation will arise against debt settlement companies who engage in this type of conduct.
To read more about the actions being taken by the New York Attorney General, see here (http://www.oag.state.ny.us/media_center/2009/may/may19b_09.html)
Chris Hellums may be contacted at ChrisH@PDKHLAW.com
These debt solution companies prey on desperation, offering false hope and no help, often driving these consumers even further into debt and ruining their credit.
Some debt solution companies advise consumers to do one of the following:
1. Stop paying debts
The Problem: this causes customers to face unforeseen late fees, additional interest, increased collections attempts, and even lawsuits by their creditors.
2. Stop paying debts and, instead, to place money into savings account so that enough money will accumulate to allow a settlement offer to be made to any creditors.
The Problem: The debt settlement companies’ saving plans are often extremely unrealistic, so that the promised negotiated settlements do not occur, but the debt settlement companies’ still take their fees. Also, the debt settlement plans are generally premised on consumers aggregating savings, over one to three years, from which both the payment of the company’s fees and any negotiated settlement are to be made. Yet most consumers who are targeted by these companies are unable to meet the savings requirements because of their precarious financial situation.
3. Ignore collection efforts or refer those efforts to the debt settlement company.
The Problem: it doesn’t work and consumers continue to find themselves subject to creditors’ collection efforts, including lawsuits, and consumers’ credit histories are further damaged when the consumers stop paying debts.
4. Seek additional sources of funds through means such as selling their blood plasma, mowing lawns, cutting down on car insurance and borrowing from their neighbors and church.
The Problem: Even for those consumers who can meet the requirements set out by a plan, their amount of aggregated savings is ordinarily insufficient to settle their debts. As a result, many consumers find themselves worse off financially because of these debt settlement plans. I suspect that much litigation will arise against debt settlement companies who engage in this type of conduct.
To read more about the actions being taken by the New York Attorney General, see here (http://www.oag.state.ny.us/media_center/2009/may/may19b_09.html)
Chris Hellums may be contacted at ChrisH@PDKHLAW.com
Thursday, May 14, 2009
What is going on with Juries these days???
In the last 6 months, our firm has obtained four multi-million dollar verdicts? For years, the jury system has been under attack by surrogates of mega corporations who claim that the jury system is out of control. For years, those attacks have been successful and juries have been reluctant to punish corporate wrongdoing.
Those trends seem to be changing. Recently, our firm conducted a focus group in a very conservative county. We represent several small businesses in that county whose insurance carrier denied their storm damage claims and effectively put them out of business. We conducted the focus group to gauge their thoughts on many issues, including punitive damages. We selected a conservative cross section, which included insurance agents and business owners. The results were striking.
Small town America is angry with corporate America. Small town America says corporate America is getting a bail out and small town America is not only getting left out, but forced to pick up the tab. One member of the panel spoke from the heart. He said that in the past he was reluctant to award significant damages in a civil case for fear that the trickle-down effect would hurt his local community, but now he believes otherwise.
When we hear about the excesses of corporate pay, it is easy to see why small town America feels like they do today.
For more on excessive corporate pay and golden parachutes, see the attached article:
http://finance.yahoo.com/career-work/article/107075/golden-coffins-golden-offices-golden-retirement?mod=career-salary_negotiation
Those trends seem to be changing. Recently, our firm conducted a focus group in a very conservative county. We represent several small businesses in that county whose insurance carrier denied their storm damage claims and effectively put them out of business. We conducted the focus group to gauge their thoughts on many issues, including punitive damages. We selected a conservative cross section, which included insurance agents and business owners. The results were striking.
Small town America is angry with corporate America. Small town America says corporate America is getting a bail out and small town America is not only getting left out, but forced to pick up the tab. One member of the panel spoke from the heart. He said that in the past he was reluctant to award significant damages in a civil case for fear that the trickle-down effect would hurt his local community, but now he believes otherwise.
When we hear about the excesses of corporate pay, it is easy to see why small town America feels like they do today.
For more on excessive corporate pay and golden parachutes, see the attached article:
http://finance.yahoo.com/career-work/article/107075/golden-coffins-golden-offices-golden-retirement?mod=career-salary_negotiation
Image by Roscoe Van Damme via Flickr
Image by Global Jet via Flickr
Wednesday, May 13, 2009
PDKH client awarded $17 million in damages today in a commercial case involving a logging skidder
PDKH client Chapman Logging was awarded $17,000,000.00 today by a Hale County jury. The case involved the sale of a defective skidder equipped with a Cummins engine. The case was tried by PDKH attorney David Hodge, along with Vance McCrary of The Gardner Firm and James Seale of Greensboro. Cummins was represented by Matt Landreau of Columbus, Ga.
David Hodge can be reached toll free at 866-515-8880 or by e-mail at DavidH@pdkhlaw.com
David Hodge can be reached toll free at 866-515-8880 or by e-mail at DavidH@pdkhlaw.com
What are 412(i) Plans and what are the problems with these plans
412(i) is a provision of the tax code. A 412(i) plan is a defined pension plan. A 412(i) plan differs from other defined benefit pension plans in that it must be funded exclusively by the purchase of individual life insurance products (insurance and annuities). It provides specific retirement benefits to participants once they reach retirement and must contain assets sufficient to pay those benefits. To create a 412(i) plan, there must be a plan to hold the assets. The employer funds the plan by making cash contributions to the plan, and the Code allows the employer to take a tax deduction in the amount of the contributions, i.e. the entire amount.
The plan uses the contributed funds to purchase some combination of life insurance products (insurance or annuities) for the plan. As the plan participants retire, the plan will usually sell the policies for their present cash value and purchase annuities with the proceeds. The revenue stream from the annuities pays the specified retirement benefit to plan participants.
Where did the problems start?
In the late 1990's brokers and promoters such as Kenneth Hartstein, Dennis Cunning, and others began selling 412(i) plans designed with policies created and sold through agents of Pacific Life, Hartford, Indianapolis life, and American General. These plans were sold or administered through companies such as Economic Concepts, Inc., Pension Professionals of America, Pension Strategies, L.L.C. and others.
These plans were very lucrative for the brokers, promoters, agents, and insurance companies. In addition to the costs associated with administering the plans, the policies of insurance had high commissions and high surrender charges.
These plans were often described as Pendulum Plans, or other similar names. In theory, the plans would work as follows. After the defined pension plan was set up, the plan would purchase a life insurance policy insuring the life of an individual. The plan would have no cash value (and high surrender charges) for 5 or more years. The Corporation would pay the premium on the policy and take a deduction for the entire amount. In year 5, when the policy had little or no cash value, the plan would transfer the policy to the individual, who would take it at a greatly reduced basis. Subsequently, the policy would bloom like a rose, and the individual would have a policy with significant cash value which he or she could withdraw tax free.
Who signed off on the plan?
Attorney Richard Smith at the law firm of Bryan Cave issued tax opinion letters opinion which stated that many of the plans complied with the tax code.
So what is the problem?
In the early 2000s, IRS officials began questioning Richard Smith and others and giving speeches at benefits conferences wherein they took the position that these plans were in violation of both the letter and spirit of the Internal Revenue Code.
In February 2004, the IRS issued guidance on 412(i) and began the process of making plans "listed transactions." Taxpayers involved in listed transaction are required to report them to the IRS. These transactions are to be reported using a form 8886. The failure to file a form 8886 subjects individual to penalties of $100,000 per year, and corporations $200,000 per year. These penalties are often referred to as section 6707 penalties. Advisors of these plans are required to maintain records regarding these plans and turn them over to the IRS, upon demand.
In October of 2005, the IRS invited those who sponsored 412(i) plans that were treated as listed transactions to enter a settlement program in which the taxpayer would recind the plan and pay the income taxes it would have paid had it not engaged in the plan, plus interest and reduced penalties.In late 2005, the IRS began obtaining information from advisors and actively auditing plans and more recently, levying section 6707 penalties.
You may contact Chris Hellums at Chrish@pdkhlaw.com
For more information on 412(i) litigation, see http://412ilitigation.blogspot.com/
The plan uses the contributed funds to purchase some combination of life insurance products (insurance or annuities) for the plan. As the plan participants retire, the plan will usually sell the policies for their present cash value and purchase annuities with the proceeds. The revenue stream from the annuities pays the specified retirement benefit to plan participants.
Where did the problems start?
In the late 1990's brokers and promoters such as Kenneth Hartstein, Dennis Cunning, and others began selling 412(i) plans designed with policies created and sold through agents of Pacific Life, Hartford, Indianapolis life, and American General. These plans were sold or administered through companies such as Economic Concepts, Inc., Pension Professionals of America, Pension Strategies, L.L.C. and others.
These plans were very lucrative for the brokers, promoters, agents, and insurance companies. In addition to the costs associated with administering the plans, the policies of insurance had high commissions and high surrender charges.
These plans were often described as Pendulum Plans, or other similar names. In theory, the plans would work as follows. After the defined pension plan was set up, the plan would purchase a life insurance policy insuring the life of an individual. The plan would have no cash value (and high surrender charges) for 5 or more years. The Corporation would pay the premium on the policy and take a deduction for the entire amount. In year 5, when the policy had little or no cash value, the plan would transfer the policy to the individual, who would take it at a greatly reduced basis. Subsequently, the policy would bloom like a rose, and the individual would have a policy with significant cash value which he or she could withdraw tax free.
Who signed off on the plan?
Attorney Richard Smith at the law firm of Bryan Cave issued tax opinion letters opinion which stated that many of the plans complied with the tax code.
So what is the problem?
In the early 2000s, IRS officials began questioning Richard Smith and others and giving speeches at benefits conferences wherein they took the position that these plans were in violation of both the letter and spirit of the Internal Revenue Code.
In February 2004, the IRS issued guidance on 412(i) and began the process of making plans "listed transactions." Taxpayers involved in listed transaction are required to report them to the IRS. These transactions are to be reported using a form 8886. The failure to file a form 8886 subjects individual to penalties of $100,000 per year, and corporations $200,000 per year. These penalties are often referred to as section 6707 penalties. Advisors of these plans are required to maintain records regarding these plans and turn them over to the IRS, upon demand.
In October of 2005, the IRS invited those who sponsored 412(i) plans that were treated as listed transactions to enter a settlement program in which the taxpayer would recind the plan and pay the income taxes it would have paid had it not engaged in the plan, plus interest and reduced penalties.In late 2005, the IRS began obtaining information from advisors and actively auditing plans and more recently, levying section 6707 penalties.
You may contact Chris Hellums at Chrish@pdkhlaw.com
For more information on 412(i) litigation, see http://412ilitigation.blogspot.com/
Monday, May 11, 2009
PDKH Lawyers obtain award for mother and daugher injured by drunk driver
Pittman Dutton Kirby & Hellums attorneys Chris Hellums and David Hodge of Birmingham, along with Tom Denham of Moulton recently tried and received a verdict in the Circuit Court of Lawrence County in the amount of $2,075,000. The verdict consisted of $850,000 in compensatory damages and $1,225,000 in punitive damages.
PDKH represented a family from Lawrence County whose lives were forever altered when they were hit head-on collision by a drunk driver on July 18, 2006. The driver of the other vehicle crossed the center line and hit the Lawrence County residents head on. At trial, PDKH lawyers Chris Hellums and David Hodge were able to introduce into evidence that at approximately 9:40 am in the morning, the driver of the other vehicle was intoxicated at a level of almost four times the legal limit and that his vehicle had open containers and empty bottles in the front seat.
The force of the impact was so great that the client's vehicle traveled 39 feet in the opposite direction from which it was traveling and caught fire. Heroic fellow motorists were able to pull the mother and daughter from the burning vehicle as it exploded in flames. The mother suffered numerous physical injuries including two collapsed lungs, a broken collar bone and broken ribs, all of which required multiple surgeries, extensive hospitalization and painful physical therapy. The 16 year-old daughter suffered a broken back and a spinal cord injury that left her paralyzed. After months of surgeries and physical therapy, coupled with a strong will to overcome and prayers from others, the teen was able to take her first steps without the assistance of a wheel chair. Even though the teen will never live without pain, she continues to work hard and undergo physical therapy as she attempts to walk normally again.
This case was tried by partners Chris Hellums and David Hodge. Chris Hellums can be reached at chrish@pdkhlaw.com and David Hodge can be reached at davidh@pdkhalw.com .
To read more:http://legacy.decaturdaily.com/decaturdaily/news/060719/wreck.shtml
http://legacy.decaturdaily.com/decaturdaily/news/060824/hurt.shtml
http://legacy.decaturdaily.com/decaturdaily/news/061010/morgan.shtml
PDKH represented a family from Lawrence County whose lives were forever altered when they were hit head-on collision by a drunk driver on July 18, 2006. The driver of the other vehicle crossed the center line and hit the Lawrence County residents head on. At trial, PDKH lawyers Chris Hellums and David Hodge were able to introduce into evidence that at approximately 9:40 am in the morning, the driver of the other vehicle was intoxicated at a level of almost four times the legal limit and that his vehicle had open containers and empty bottles in the front seat.
The force of the impact was so great that the client's vehicle traveled 39 feet in the opposite direction from which it was traveling and caught fire. Heroic fellow motorists were able to pull the mother and daughter from the burning vehicle as it exploded in flames. The mother suffered numerous physical injuries including two collapsed lungs, a broken collar bone and broken ribs, all of which required multiple surgeries, extensive hospitalization and painful physical therapy. The 16 year-old daughter suffered a broken back and a spinal cord injury that left her paralyzed. After months of surgeries and physical therapy, coupled with a strong will to overcome and prayers from others, the teen was able to take her first steps without the assistance of a wheel chair. Even though the teen will never live without pain, she continues to work hard and undergo physical therapy as she attempts to walk normally again.
This case was tried by partners Chris Hellums and David Hodge. Chris Hellums can be reached at chrish@pdkhlaw.com and David Hodge can be reached at davidh@pdkhalw.com .
To read more:http://legacy.decaturdaily.com/decaturdaily/news/060719/wreck.shtml
http://legacy.decaturdaily.com/decaturdaily/news/060824/hurt.shtml
http://legacy.decaturdaily.com/decaturdaily/news/061010/morgan.shtml
Friday, May 8, 2009
Lawyer Chris Hellums appointed as Co-Lead Counsel for the Total Body Formula MDL
United States District Judge R. David Proctor of The United States District Court for the Northern District of Alabama, Southern Division, has appointed attorney Chris Hellums, of the Birmingham, Alabama firm of Pittman Dutton Kirby & Hellums as co-lead counsel of the Executive Committee to the Personal Injury Plaintiff's Steering Committee for the Total Body Multi-District Litigation.
Total Body Formula Recall
The U.S. Food and Drug Administration is advising consumers not to purchase or consume Total Body Formula in the flavors of Tropical Orange and Peach Nectar, or Total Body Mega Formula in the Orange/Tangerine flavor. The liquid dietary supplement products may cause severe adverse reactions, including significant hair loss, muscle cramps, diarrhea, joint pain and fatigue.
The Total Body Formula products are sold in eight-ounce and 32-ounce plastic bottles. The Total Body Mega Formula is sold in 32-ounce plastic bottles. Both products are distributed by Total Body Essential Nutrition of Atlanta. The company is the sole distributor of the products and has voluntarily recalled Total Body Formula in the flavors of Tropical Orange and Peach Nectar and Total Body Mega Formula in Orange/Tangerine flavor.
Batches of Total Body Formula contain excessive amounts of selenium.
“In excess, selenium is a toxin to humans and causes, among other things, hair loss, severe muscle cramps, motor neuron death leading in some cases to amyotrophic lateral sclerosis (Lou Gehrig’s disease), nausea, vomiting and diarrhea, and endocrine disturbances including thyroid hormone and insulin regulation problems.
The U.S. Food and Drug Administration released a warning Thursday, saying it has information on 23 people in Florida who “experienced serious reactions to these products seven to 10 days after ingestion.” The administration advised consumers not to “purchase or consume Total Body Formula” in tropical orange and peach nectar flavors, or the mega formula in the orange/tangerine flavor.
The FDA says the product has been distributed in 15 states, including Florida, Alabama, Georgia and Tennessee. Andrea Turner, a spokeswoman for the Tennessee Department of Health, told The Associated Press three people in her state have suffered hair loss and diarrhea after ingesting Total Body Formula.
If you have any questions or need assistance please contact Chris Hellums at ChrisH@pdkhlaw.com or call toll free 1-866-515-8880
The Total Body Formula products are sold in eight-ounce and 32-ounce plastic bottles. The Total Body Mega Formula is sold in 32-ounce plastic bottles. Both products are distributed by Total Body Essential Nutrition of Atlanta. The company is the sole distributor of the products and has voluntarily recalled Total Body Formula in the flavors of Tropical Orange and Peach Nectar and Total Body Mega Formula in Orange/Tangerine flavor.
Batches of Total Body Formula contain excessive amounts of selenium.
“In excess, selenium is a toxin to humans and causes, among other things, hair loss, severe muscle cramps, motor neuron death leading in some cases to amyotrophic lateral sclerosis (Lou Gehrig’s disease), nausea, vomiting and diarrhea, and endocrine disturbances including thyroid hormone and insulin regulation problems.
The U.S. Food and Drug Administration released a warning Thursday, saying it has information on 23 people in Florida who “experienced serious reactions to these products seven to 10 days after ingestion.” The administration advised consumers not to “purchase or consume Total Body Formula” in tropical orange and peach nectar flavors, or the mega formula in the orange/tangerine flavor.
The FDA says the product has been distributed in 15 states, including Florida, Alabama, Georgia and Tennessee. Andrea Turner, a spokeswoman for the Tennessee Department of Health, told The Associated Press three people in her state have suffered hair loss and diarrhea after ingesting Total Body Formula.
If you have any questions or need assistance please contact Chris Hellums at ChrisH@pdkhlaw.com or call toll free 1-866-515-8880
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