BHG Financial Class Action Lawsuit Dismissed

BHG Financial, formerly known as Bankers Healthcare Group is a common creditor that we defend small businesses and individuals against. Although they initially marketed their loans for business purposes, primarily for those in the medical field, they seem to have converted their practice to providing loans to businesses and consumers alike. Lawsuits from BHG are often against single individuals who usually admit to us that they never had a business but were able to obtain a loan from BHG. The rate of default on these BHG loans has increased from our perspective given the increase in lawsuits and collection matters that we are engaged on. This higher rate of default may be due to the higher rate of loans that were funded.

A recently proposed class action lawsuit against BHG accused the bank of issuing loans to consumers that were high cost and “fraudulently disguised as business loans to hide their predatory lending practices.” The lawsuit alleged that BHG was fully aware that the loans they were providing were given to borrowers who had no intention of starting their business but were W2 employees instead. Part of the alleged deception was the fact that they labeled the loans as being commercial loans in order to evade federal and state regulation and consumer protection statutes. BHG also allegedly charged interest on undisbursed funds and secured their loans with a borrower’s property as collateral without providing the necessary disclosures to consumers.  However, this proposed class action was voluntarily dismissed by the law firm that was working on establishing it.

Other firms seem to be working on bringing a new class action against BHG but we will see if it is ultimately filed. In the meantime, consumers and small businesses alike must defend themselves against BHG lawsuits in order to protect themselves from default judgments being obtained against them. If a default judgment is obtained by BHG then a motion to vacate the judgment must be filed to re-open the case. Re-opening the case allows the defendant to defend themselves against BHG on the merits of the case and also keeps the burden on Bankers to prove their case. It also gives defendants the leverage to negotiate a potential settlement that will significantly reduce the balance of the loan. In our experience, defending against BHG lawsuits and vacating judgments provides the ability to settle these loans for anywhere between 50%-70% off of the total balance which is a significant reduction while also providing interest free re-payment plans for up to 5 years which is usually unheard of with other creditors. BHG has been one of the easier creditors when it comes to negotiating reductions and payment plans as long as the proper defense is established, and the necessary leverage can be used.