Documentary looks at lending and practices of debt collectors
Consumerism has hit independent movies, in the wake of indie hits such as
2004's Super Size Me, about the fast-food industry, and this year's An
Inconvenient Truth, Al Gore's warning about global warming.
Now comes Maxed Out, an independent film on the credit-card and collection
industries made with the help of two local consumer pit bulls: advocate Bud
Hibbs and attorney Jerry Jarzombek.
The film, scheduled for release next year, will have its first local preview
Saturday at the Modern Art Museum. Hibbs and Jarzombek, members of the National
Association of Consumer Advocates, will answer questions afterward.
Next week, a national distribution deal for the film and DVD will be announced,
director James Scurlock said. Simon & Schuster will publish the companion book,
which is expected to be released this winter.
The film looks at the dramatic changes in lending and collection practices
since the 1980s. It focuses on real people caught in financial traps.
"I was shocked by what we found," Scurlock said. "I started the movie looking
at consumerism and how we're spending too much money, but the project really
transformed to how the financial industry has been baiting and hooking people
for the past 25 years."
Part of that transformation, Scurlock said, came from sitting at a coffeehouse
in Fort Worth two years ago with Hibbs and Jarzombek.
"I was asking around for information from a network of journalists, professors
and advocates, and [Hibbs'] name kept coming up," Scurlock said.
It's easy to see why. Hibbs has been a consumer advocate in the area since his
first book, Stop It!, hit the shelves. It told how to stop abusive practices by
debt collectors.
He has appeared on The Oprah Winfrey Show, Today and other national talk shows.
He became a regular on several major-market radio stations, including KRLD/1080
AM.
Now he's getting ready to launch a talk show with a satellite radio company
that will be called Voice of the American Consumer. He's working on his third
book deal, and his Web site, www.budhibbs.com, gets more than 1 million hits a
week, Hibbs said.
He said his office advises consumers on a sliding scale, working at no cost for
members of the military and single mothers. His staff investigates the
companies behind his clients' complaints, looking for connections and flaws.
"We like to expose illegal conduct of the debt-collection industry," he said,
based on provisions in the federal Fair Debt Collections Practice Act of 1978.
In the film, Hibbs says the lending and collection industries are much more
predatory on consumers today than they were a generation ago.
"The bottom line is, the deck is stacked against you from Day 1," he says. "If
you're smart enough to understand that and know that, God bless you. If not,
boy, are they going to make a lot of money off of you."
Bankers and debt collectors have a different view.
Tracey Mills, an American Bankers Association spokeswoman, said the banking
industry's credit-access expansion has had positive effects on consumers.
"There are very unfortunate stories about people who have gotten into trouble,"
she said. "But there are also many stories about people who benefited from
credit that we hear all the time."
The collection industry, which the movie also portrays in a harsh light, does
have some rogue players but overall acts ethically and legally, said Dwain
James, executive director of the American Collectors Association of Texas.
James said that those who don't follow the laws find lawsuits filed against
them.
Jarzombek frequently sues debt collectors. He recently sued a New York agency
on behalf of a Bedford mother and daughter. According to the filing, a company
employee called a neighbor and said she was working with the Bedford police to
make an arrest. Relaying such a threat is illegal.
Hibbs calls the movie's portrayal of predatory lending and collection practices
"the human side of debt."
Two of the victims featured are mothers whose children committed suicide after
incurring substantial credit-card debt as college students. The mothers, Janne
O'Donnell and Trisha Johnson, both from Oklahoma, had children at the
University of Texas and the University of Central Oklahoma, respectively.
O'Donnell's son had racked up $11,000 in credit-card debt and discussed the
pressure with his mother a week before his suicide. Johnson's daughter, who had
$2,500 in debt, was surrounded by credit-card bills when she was found dead.
The mothers said in the movie that they were still getting credit-card offers
for their kids, Scurlock said.
The Consumer Federation of America has noted that college students are a
particular focus of lenders, receiving credit offers totaling tens of thousands
of dollars. It has recommended that Congress restrict lenders' ability to offer
credit to young people with low incomes, but no action has been taken.
Jarzombek and Hibbs said that big-name banks are resorting to predatory loan
tactics that were once associated with payday lenders and pawnshops. They see
it this way: The banks target customers with low incomes or debt problems,
offering them credit cards with low rates that expire in a year. When the
accounts become delinquent, the banks raise interest rates on the money already
borrowed and collect fees. When the accounts fail, the banks sell them for
pennies on the dollar to collection agencies, who often work outside the law.
Again, Mills with the ABA argues that the movie's viewpoint is not valid.
"There are very strict regulations against predatory lenders," she said. Also,
"banks compete most heavily for customers with decent credit histories and
scores because those are the people who will pay them back."
Jarzombek and Hibbs said Texas laws are among the best at protecting consumers
against the strong-arm practices of collection agencies.
"We live in the most consumer-friendly area in the nation," Hibbs said. "They
can't garnish your wages, and they can't take our houses. But people need to
understand their rights."
