Capital One Caught With Its Hands In Your Wallet

28 Dec Capital One Caught With Its Hands In Your Wallet

Capital One violated the bankruptcy discharge thousands of times and got caught, as wasrecently reported by the Wall Street Journal. It filedclaims in second bankruptcy cases based upon debts whichwere already discharged in earlier cases.

As my colleague Andy Miofsky wrote, “There is a reason Capital One Bank portrays credit card banks as a horde of marauding invaders. Merriam Webster’s Dictionary defines maraud as ‘‘to roam about and raid in search of plunder’.’’ Here, it plundered bankruptcy estates. It caused other creditors to receive lower payments and some debtors to pay more than they should have.

This credit card issuer files a great number of claims every month in bankruptcy cases. In 2008 the United States Trustee filed suit against it in Massachusetts, stating that it had filed 5,600illegal claims based on debts which were already discharged in bankruptcy.

An independent auditor was appointed to review the results of Capital One’s belated investigation – you know, like closing the barn door after the horses have escaped. The auditor determined thatabout 15,000 illegal claims had been filed. This figureused Capital One’s own waiver ofexclusionsofclaims otherwise included in the illegal claims categorywhere it feltit was too burdensome to be accurate. The auditor is now working onrefunds of payments made to Capital One based on these bankruptcy-discharged andillegal claims, plus appropriate attorney fees.

This just burns me. There’s a legend at the bottom of every proof of claim form which states that the penalties for a false filing is up to a $500,000.00 fine and five years’ imprisonment. The United States Trustee did not seek a fine, much less any imprisonment.But it regularly seeks to deny or revoke the discharge of a debtor caught filing false statements. How about penalizing Capital One by prohibiting any claims for a period of time? There’s no lesson to be taught, or penalty to be incurred, if all it suffers is the return of its wrongful gains.

Can you spell “Double Standard”? I can.


Image Credit: radacina

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L. Jed Berliner practices exclusively in consumer bankruptcy, foreclosure defense, and related consumer protection litigation such as credit card defenses and suing debt collectors. He established his Springfield, MA practice in 1988. Attorney Berliner is a regular and active contributor to the Bankruptcy Law Network, the Bankruptcy Roundtable, and the National Association of Consumer Bankruptcy Attorneys, three specialized consumer bankruptcy forums on the Internet, and is an informal mentor to regional practitioners. He is recognized by his peers as an expert in consumer bankruptcy issues. He thoroughly enjoys being rated "excellent" in his client surveys.

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