Understanding Mutual Funds Part One

Are you a newcomer when it comes to playing the stock market? No big deal at all! This series of articles on mutual funds will make it simple for you to understand what a mutual fund is, what it is all about and whether it is worth your while to invest in one. My first three articles are called “Mutual Funds For Beginners” and they lay down the basics.

The next one is called “Expenses Associated With Mutual Funds” and it covers the basic things you can expect to be charged for if you decide to invest in a mutual fund. The last two are titled “Is Investing in a mutual fund worth your while?” and they go over the advantages and disadvantages of mutual funds. First let us break things down to a molecular level and talk about securities. The fancy definition of a security is a negotiable instrument representing financial value.

This definition is quite esoteric so let’s look at an example of a security to help you get a better idea of what one is. A stock is considered a security. Stocks can be bought or sold, and therefore have financial value, and a share of stock literally means that as a stockholder you “share” a fraction of ownership in the company whose stock you own. Bonds, which are contracts to pay back money with interest on specified dates, are also securities. If you hold a bond, you know that you are going to receive money on these set dates, so bonds have financial value as well.

Stocks are bought and sold at exchanges called stock markets, and bonds at bonds markets. A bonds market is typically very different from a stock market. If you were looking to invest in stock, or sell the stock you have, you would hire the aid of a stock broker who would charge you a commission for completing this work for you.

Usually you are going to need some sort of a broker to help you do this, unless you already own stock from the company you would like to purchase from. The same goes for bonds – you are going to need a dealer. Now that we have the very basics down, let’s go over mutual funds. See my article “Mutual Funds For Beginners Part Two!

Mallory Megan works for Rapid Recovery Solution and writes articles on medical collection agencies. Unique version for reprint here: Understanding Mutual Funds Part One.

California Couple Awarded $500,000 In FDCPA Case

Last month, Manuel and Luz Fausto won one of the biggest collection awards documented in the last couple of years under the Fair Debt Collection Practices Act (FDCPA) against Credigy Services Corporation. A California jury awarded the Faustos $500,000 in damages derived from harassment by Credigy collectors. Of the sum, granted $100,000 was for actual damages the Faustos experienced, while $400,000 was in punitive damages, granted for malicious and reckless disregard of the couples rights. According to one of the Faustos lawyers, David Humphreys of Humphreys Wallace Humphreys, P.C., and the case derived from a debt on a Wells Fargo charge card opened in 1992.

Humphreys stated that the Faustos routinely paid the account balance on the credit card, but the balance kept increasing. The Faustos then requested that the account be frozen, but their request was declined by a local Wells Fargo branch. Humphreys said the Faustos received help in paying the balance from a local business that promised to negotiate a discounted payoff of credit card balances. The Faustos were under the impression that the debt owed to Wells Fargo was paid off with two money orders in the late 1990s. In 2006, Credigy contacted the Faustos with a demand of almost $17,000. Humphreys noted that a Brazilian affiliate of Credigy made over 90 threatening calls and sent numerous letters to the Fausto home, even after a cease and desist notice was sent to the company.

Luz Fausto recorded the last phone call made by the debt collectors, which documents false claims that threatened the Faustos livelihood. Credigy counter sued the Faustos on the grounds that the debt collection call was confidential. Humphreys said that Credigys collection efforts did not cease until a lawsuit was filed. Humphreys claimed that the jury award was the largest given to a consumer in a case brought under the FDCPA.

Manny Newburger, an attorney for debt collectors fears that consumer lawyers may make the false assumption that all juries will award large damages because it was awarded in this case. The Fausto case is fact-specific, Newburger stated. In the vast majority of cases there is little or no evidence of actual damages presented by the consumer. This is one reason why other debt collection lawyers are not willing to let the verdict in this case affect their evaluation of other cases, he noted.

Newburger said that the defendants in this case sued for invasion of privacy, a common defense but also, a theory that is asserted in a lot of the cases filed around the country involving alleged collection abuse and the jury ruled against the defendant in the invasion of privacy claim. According to Newburger, the verdict was based on state legislation. This is a California specific case, he said.

Newburger argues that the only thing the Fausto case means is that the consumer won. He does not think the size of the award will entice more consumers to sue debt collection agencies. I think this verdict is indicative of what this jury thought of this particular case, but not of anything else, Newburger said. As for the size of the jury award, Newburger said that he had heard of far larger rulings in FDCPA cases.

The ruling for the statutory penalty is still undecided. Once decided, a judgment could be granted for any sum up to $1,000 for Credigys violations of the FDCPA. It is unknown if Credigy will appeal the ruling. The lawyers for the debt collection agency could not be contacted.

Rapid Recovery Solution is a medical debt collection company.

What Is The FDCPA?

In order to do battle with the problems associated with harassing debt collectors and debt collection companies, the Fair Debt Collection Practices Act (also known as the FDCPA) was designed. The laws and regulations legislated by the Fair Debt Collection Practices Act not only shield consumers, but they also aid debt collection agencies as well by encouraging them to operate in a serious and professional manner when engaging in communication with supposed debtors.

In most situations lenders are within their rights to pursue payment. This includes situations where the borrower is delinquent in their responsibilities and then consequently default on their financial obligations, and or if the borrower simply needs a little more time due to crude financial circumstances and strain. These above situations represent instances in which the lender is not acquiring his due payments from the borrower when they began with a reasonable expectation of being paid back in an adequate time frame. No matter the reason in these cases, the lender in question is legally within their rights to seek payment that they are due.

In these situations, a lot of times lenders have no other option but to become involved with a collection agency. The goal of collection agencies is to recover and collect all of the monies that are overdue to their clients (the lenders). Due to the Fair Debt Collection Practices Act, collection companies can not act neglectfully and with inadvertence for the consequences of their actions when trying to recover monies for their clients.There are several conditions that come along with the Fair Debt Collection Practices Act as enacted in 1978. These conditions both protect debtors and enable collection companies to strongly pursue valid debts.

Even if a debtor advises a collections representative to terminate all further contact with him there are other means by which a debt collection representative may aim for the valid debt. For example, under the FDCPA, while the collection rep must agree with the debtors request to cease any further contact with them, they are also perfectly within their rights to make the debtor aware that they intend to pursue the debt via legal channels through an attorney.

If the collection agency accountable for recovering the delinquent account cannot communicate with or cannot reach the debtor, then they are legally allowed to contact third parties related to the debtor. However, under the FDCPA there are some boundaries to contacting third parties. First and foremost, the collection rep cannot harass the third party or be non-courteous. Also importantly, the collection rep cannot violate the right of privacy of the debtor by disclosing the nature of the call to this third party.

Among guidelines for collection agencies to adhere to, the Fair Debt Collection Practices Act also has a penalization system in place for those collection companies that do not adhere with the aforementioned stipulations. These penalties against collection agencies found to be in violation of the FDCPA include: fines; license revocation; and even legal actions.

At first glance it appears as though the guidelines of the Fair Debt Collection Practices Act are strongly skewed toward the debtor. However, these rules also protect the debt collection agency by helping them steer to wards fair practices and policies in a courteous and professional manner. Without the FDCPA, the unprofessional behaviors of some select few collection agencies would go unchecked and thus would undermine the entire reputation of the business of debt collection.

Mallory Megan works for a collections agency that works with a debt collection lawyer. Also, she does pieces on business, finance, the credit industry and collections agencies.