Category Archives: Harassment

Cease-Communication Letters – Make Debt Collectors Leave you Alone

Cease-Communication Letters

Debt collectors often try to wear down the resistance of consumers by repeatedly calling and harassing them. If this is happening, you can easily make it stop with a cease communication letter. Here’s how.

They’re Trying to Harass You

Debt collectors know that the people they are calling do not have much money – their purpose in harassing you is to move themselves to the head of the line. The way they do this is by attempting to inflict more pain or annoyance on you than other bill collectors. In other words, debt collectors know you only have so much money to pay your bills – they’re competing with each other. The company that harasses you the most “wins.”

Among other things, this means you should never take what they say personally. But you don’t have to put up with it.

Sometimes individual debt collectors claim not to engage in abusive behavior, but rather to be the victims of it. I leave the reader to decide how much sympathy these debt collectors deserve. My point is that, in general, the debt collectors seek emotional engagement. That is, they want you to take what they’re saying personally and to dispute or argue about it.

In general, the best thing you can do is avoid paying any attention to them. Write them a cease communication letter.

You Can Make them Stop Bugging You

The collectors are not concerned with your priorities or well-being, but you should be. It can be hard to keep a clear head amidst all the noise and all the people trying to use you. Luckily the Fair Debt Collection Practices Act (FDCPA) offers some help. Under the FDCPA, 15 U.S. Code Section 1692(c)c,

“if a consumer notifies a debt collector in writing that the consumer wishes [it] to cease further communication with the consumer, the debt collector shall not communicate further…with respect to such debt.”

However, the collector may inform the consumer that it’s efforts are being terminated, or notify the consumer that it “may or will invoke specified remedies which are ordinarily invoked” (i.e., suing or reporting to the credit agencies). They can tell you that once, but then they have to leave you alone.

Many people fear that by invoking this rule they will cause the debt collectors to sue them. This fear is misplaced. The debt collectors have their own guidelines based on what they expect to collect. That is, they may sue you, if you fit within their guidelines, but making them leave you alone is not one of those guidelines (that I’ve ever observed).

If anything, writing a cease communication letter may reduce your chance of being sued because it keeps the debt collector from gathering more information about you. Lawyers dislike uncertainty. They want to be pretty sure they’re going to make money if they go to the trouble of suing you. Your talking to them is one way they find out what they need in order to decide to sue you. Making them leave you alone leaves them in the dark.

What to Do to Make Debt Collectors Stop Harassing You

Crucially, if the cease communication notification is made by U.S. mail, the communication is complete “upon receipt.” In other words, to make sure the debt collector is forced to leave you alone, it makes sense (although it is not required by the law) to send the letter by certified mail. That way you have proof that the debt collector received the letter and when it received it. Any further communication would be in violation of the FDCPA.

When the phones stop ringing off the hook, you will be freer to make decisions according to your own best interests and priorities.

For More Help

If you would like a product that gives you more information on whether the cease-communication letter or the debt validation letter would work for you and be a good idea, along with sample letters that really work, click here. 

Check out our Guide to Legal Research and Analysis for a guide to researching and laws and cases in the most effective way. But legal research is more about what you do with what you find, and so this is a primer on legal thinking and analysis as well.

Who is a Debt Collector after Santander Case

Debt collectors are governed by the Fair Debt Collection Practices Act (FDCPA). If you are able to make a counterclaim under that Act, you will improve your defense. Thus the questions are, who is a debt collector, and how do you show that the person suing you is one.

The Supreme Court  issued rulings in 2017 that will make it more difficult for debt defendants to obtain legal representation and will cause debt collectors to engage in more deceptive, dishonest and abusive behavior. Nevertheless, most people will still be able to sue debt collectors. We discuss how after our discussion of the Santander case.

Fair Debt Collection Practices Act

When Congress passed the FDCPA, debt collectors were such a problem that they were a threat to the American way of life. The FDCPA was therefore designed to prevent fraud, deception and unfairness in general in the collection of debts. Congress named numerous specific actions as “per se” violations of the Act and also included the more general description of “unfair” debt collection practices.

It wanted to prevent debt collectors from changing the forms their actions took without changing what they were basically doing.

The Supreme Court has just reduced that Congressional intent to a farce, applying just half of the statutory definition of “debt collector” to a case and finding that, under that half of the definition, junk debt buyers were not debt collectors.

Real-Life Debt Collection

In most debt cases, creditors sell charged-off debt to debt buyers who exist to collect that money by hook or crook. They used to hire debt collectors to collect on debts and paid them from the proceeds, Creditors now get their money first and let the debt collectors take theirs from the debtors. All that has happened is that nominal ownership of the debt has changed. In other words, debt collectors have assumed a different form to pursue the very same activities.

Henson et al. v. Santander Consumer USA, Inc.

The Supreme Court has repeatedly said that it would not allow parties to elevate form over substance to evade the impact of laws . Santander does exactly that.

One could also characterize the Court’s ruling as dishonest. It only analyzed half of the definition of “debt collectors.” In looking at Section 1692a(6), the court examined the defining language as “any person… who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.” The court’s decision then repeatedly referred to and emphasized the words “due another,” arguing that companies were only debt collectors if they fit that traditional form of collectors.

How the FDCPA Defines “Debt Collector”

Look at the part of the definition preceding the language in question to get a truer view of the statute’s clear intention.

The term “debt collector” means any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.

Section 1692a(6) (underlined portion is the part ignored by the Supreme Court in Santander, italicized word “any” is for emphasis)

Doesn’t it seem reasonable to read “any debts” literally, so that if the principal purpose of a business is to collect debts, they’re a debt collector? Of course it does, and that would obviously include businesses that exist to purchase debts and collect on them.

Supreme Court is AGAINST Debt Defendants

The Court opinion glibly slides over that, saying that “the parties haven’t much litigated that alternative definition of debt collector and in granting certiorari we didn’t agree to consider it, either.” Santander, Slip Op. at 5. In other words, the Supreme Court agreed to hear only so much of the case as allowed them to shove a dagger into the apparent heart of the FDCPA – not enough of the case to show what the FDCPA actually intended or to do justice.

In theory, the decision in Santander leaves open the possibility that this “alternative” definition would extend the meaning of “debt collector” to junk debt buyers. On the other hand, the decision looks like a court in search of a justification for a desired outcome, and is a negative indication for the Court’s integrity. Particularly in the context of its decision in Midland Funding, LLC v. Johnson, No. 16-348 (Slip Op. 5-15-17) (see my article, “Opening the Floodgates of Bad Claims”), it shows actual hostility to the laws that protect consumers from debt collectors and a willingness to engage in intellectually dishonest games to destroy them. As a practical matter, it will likely be several years before the Supreme Court revisits the definition of “debt collector.”

Pleading that a Junk Debt Buyer is a “Debt Collector”

The Supreme Court limited its decision to the “regularly collected” language. Why? Probably because debt defendants have normally found it easy to prove a company “regularly collected” debts. In the Eighth Circuit, law firms representing collectors in three to five cases per year are“regularly collecting” debts.

Under fact pleading rules, one must plead facts constituting a basis for your legal conclusion. So debt defendants routinely allege something like the following:

Heartless, Ruthless and Merciless, represent debt collectors in dozens of lawsuits attempting to collect debts per year. They are, therefore, debt collectors, and

Heartless Debt Collector, Inc., regularly sues persons for debts purchased after default…

Use of “Regularly Collects” Debts Language

Debt defendants have typically used “regularly collected” because it is easy to demonstrate as a matter of public record. Establishing a business’s “principal purpose” will now be much more difficult. My attempts to find an authoritative definition for “principal purpose” of a business turned up zero cases. No doubt there are some cases that address the issue, but certainly not many.

Many court decisions include the term “principal purpose.”  But they use it generically, as a synonym for “main” or “major.”

I found no cases quantifying the term in any way. So it isn’t clear how much of any other purpose would be enough.

Debt buyers who purchase billions of dollars of debt for no other purpose than to collect it. But they will argue that their “principal purpose” is to “service” that debt. In their lexicon that really means extort payment in as many ways, over as long a period, as possible. But they will claim all manner of beneficial purposes for their activities.

This will alter the nature of the proof required to establish that the company is a debt collector. Information regarding a business’s “principal purpose” will be in the possession of the debt collector. Thus parties attempting to obtain that information will encounter the usual tricks when they try to get it. Expect the same series of stone walls, delays and unethical and oppressive litigation strategies debt collectors usually use. (Fortunately, this can be a double-edged sword. We train our members at Your Legal Leg Up to use this to their advantage.)

Debt defendants must now allege and attempt to prove the debt collector’s main business is to collect debts.

What Debt Defendants Should Do

Debt defendants have all the same defenses to debt lawsuits they ever did – or almost all of them. Santander applies very little to the defense of debt suits.

To state claims under the FDCPA, you need to allege the company’s principle business is the collection of debts. You should probably allege they buy debts from others for the purposes of collection. And that they provide no significant service to the debtors.

Henson v. Santander – Supreme Court Attacks the FDCPA

In Henson et al. v. Santander Consumer USA, Inc., (“Santander”), the Supreme Court hurt the FDCPA and attacked the rights of consumers. Its ruling means that the FDCPA will no longer apply to most debt collectors. This decision will make it far more difficult for debt defendants to obtain legal representation. And it will cause debt collectors to engage in more deceptive, dishonest and abusive behavior.

If you are facing debt collectors, you should know your rights and may need to defend yourself pro se.

Fair Debt Collection Practices Act

The Fair Debt Collection Practices Act (FDCPA) became law In 1978. Debt collectors were so corrupt and destructive  Congress they were a “threat to the American way of life.”  Congress named numerous specific actions as “per se” violations of the Act. It also included the more general descriptions of “unfair,” “unconscionable,” and “deceptive” debt collection practices as illegal actions. Congress wanted to keep debt collectors from changing the forms their actions took without changing what they were basically doing.

The Supreme Court has just reduced that Congressional intent to a farce. Its ruling in Santander guarantees more dishonest, careless and abusive debt collection techniques. It means consumers and honest businesses will support the worst scavengers in the world.

Real-Life Debt Collection

Instead of holding it for collection, creditors usually sell charged-off debt to debt buyers these days. When debt buyers buy a debt, their only purpose is to collect that money by hook or by crook. Creditors used to hire debt collectors to collect on debts and pay them out of the proceeds. Now they get their money first. The debt collectors take their money from the debtors. All that has happened is that nominal ownership of the debt has changed. In other words, debt collectors have assumed a different form to pursue the very same activities.

Henson et al. v. Santander Consumer USA, Inc.

The Supreme Court has not allowed parties to change the form of their actions to evade the impact of laws. Santander cheerfully elevates form over substance, however. The same actors will perform the same abhorrent deeds that the FDCPA was designed to prevent.

One could consider the Court’s ruling dishonest in that it only analyzed half of the definition of “debt collectors.” In looking at Section 1692a(6), the court examined the defining language as “any person… who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.” The decision then repeatedly referred to and emphasized the words “due another,” arguing that companies were only debt collectors if they fit that traditional form of collectors. In the Supreme Court’s view, debts which had long belonged to another but were sold for purposes of collection, change their nature when sold. Junk debt buyers are collecting on their own debts, not debts due another.

How the FDCPA Defines “Debt Collector”

We should look at the whole definition of “debt collector” to get a truer view of the statute’s intention.

The term “debt collector” means any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.

Section 1692a(6) (underlined portion is the part ignored by the Supreme Court in Santander, italicized word “any” is for emphasis).

The Court ignored the underlined portion of the definition because the debt collector at issue in the case was a bank. The parties agreed that Santander’s principal purpose was not the “collection of debts.” But the Court should not have ignored that portion of the definition, as its broadness showed congressional intention to get all “functional” debt collectors. Taking note of that intent, the Court should have read “debts owed… to another” to keep their substance despite the debt’s sale. Doing so would have prevented debt collectors from changing the NATURE of the debt merely by selling it to another party. This would have honored congressional intent and protected consumers.

Why the Court Did What it Did

Why didn’t the Supreme Court look at the whole statutory definition of “debt collector?”

The surface reason was that Santander was a bank – and the parties agreed that its business was not principally collecting debts. But that’s really only the surface fact. It would not have stopped the Court from considering the entire definition to garner congressional intention. And it wouldn’t have prevented the Court from giving a reasoned decision on the whole statute anyway. The Supreme Court grants certiorari only in a very small percentage of cases, and it has had numerous opportunities to examine the whole reality of debt collection. It chose the issue it wanted to address deliberately.

Plaintiffs in FCPA cases have usually relied on the “regularly collecting” debts language because it is easier to show than “principal purpose.”

Establishing a business’s “principal purpose” will be much more difficult. Few case use the term “principal purpose” of a business. While there must be some cases that address the issue, there are not many. Courts often use the the term “principal purpose” in judicial decisions, but its use is primarily generic.  Opinions use the words  as a synonym for “main” or “major.” I found no cases quantifying the term in any way.

“Principal Purpose” Is Hard to Prove

Junk debt buyers, who purchase billions of dollars of debt for no other purpose than to collect it in any way they can, will argue they are not debt collectors. They will claim their “principal purpose” is to “service” that debt. In their lexicon that really means extort payment in as many ways, over as long a period, as possible.

Or they will make up some other reason or claim.

This will alter the nature of the proof required to establish that the company is a debt collector. Rather than being a matter of public record, information regarding a business’s “principal purpose” will be in the possession of the debt collector. That means that parties attempting to obtain that information will have to use discovery to find it. Thus they will encounter the same stone walls, delays and unethical and oppressive litigation techniques they encounter in their other discovery attempts.

Considering the current ideology and integrity of the Supreme Court, of which debt collectors are very well aware, who knows what the courts will officially “believe?” As a debt defendant, you must now allege and prove that the debt collector’s main business is to collect debts. The judicial wind will be in your face.

Reading the Supreme Court

In theory, the decision in Santander leaves open the possibility that this “alternative” definition would extend the meaning of “debt collector” to junk debt buyers. The decision shows a court in search of a justification for a desired outcome – you should view it as a negative indication for the Court’s integrity.

Santander and another recent case, Midland Funding, LLC v. Johnson, No. 16-348 (Slip Op. 5-15-17) (see my article, “Opening the Floodgates of Bad Claims”), show actual hostility to the laws that protect consumers. They also show a willingness to engage in intellectually dishonest games to destroy them. As a practical matter, it will likely be several years before the Supreme Court revisits the definition of “debt collector” and applies the entire definition to the question of junk debt buyers.

What Debt Defendants Should Do

Debt defendants have almost all the same defenses to debt lawsuits they ever did. Santander applies very little to the defense of debt suits.

On the other hand, many and perhaps most lawyers are going to be scared away from taking debt cases. Many lawyers who do not understand Santander will simply regard the FDCPA as not applying to junk debt buyers. That is almost all the debt collectors in litigation these days. These lawyers won’t take debt defense cases or will charge much more for them. They will accomplish much less than they would have, too, because they will not counterclaim on your behalf. Lawyers who understand Santander will charge more and warn clients that winning is less likely than it used to be.

This means that far more debt defendants will be on their own.

Expect to see a motion to dismiss based on Santander if you currently have a counterclaim under the FDCPA. I believe you will want to amend your counterclaim to include the “principal purpose” language mentioned above. You will also need to conduct discovery designed to prove the company’s principal purpose.

Partial Payment to Debt Collectors a Terrible Idea

partial payment can destroy your rights
Never Make a Partial Payment

Making Partial Payment Can Kill Your Right to Defend

Partial payment can seem like such a good way to make a debt collector go away, but don’t do it.

Debt collectors love getting people to make “partial payments” on debts – on any debts, but especially old ones. It isn’t just that they want some money, any money. If you give them the money you will probably be subjecting yourself to a lot of problems. And that is especially true if the debt is very old, even if it is beyond statutes of limitations.

Partial Payments Revive Dead Debts

If your debt is beyond the statute of limitations – that is, if it is too late for the debt collector to sue you – making a partial payment will revive the debt and start the life of the debt again. This is because of an odd thing about the law – it distinguishes between the life of the debt (forever unless paid) and enforceability of a debt (the right to sue to collect, controlled by statutes of limitations). To put that into plain English, the law regards a debt as continuing to exist until it is either paid or excused in some way even if it is long past the statute of limitations. And this little bit of B.S. allows for all kinds of unethical mischief by debt collectors.

It allows debt collectors in some jurisdictions to raid bankruptcy claims even though the debts would be illegal to try to collect, and it allows for the revival of debts by a debtor making a simple mistake. If you offer a gift, for example, that promise is not enforceable because there is nothing paid for it. Giving a debt collector partial payment will put you back on the hook for the entire amount.

Unless you make a signed written agreement that you are settling the claim for the amount paid, partial payments are a terrible idea. But of course what the debt collectors tell you is that you can pay a little now and then a little later if you get a chance. Wrong. Make that payment and they’ll be after you as hard as they can go.

Partial Payments Restart the Clock

Similarly, if the debt is old and you make a payment, it restarts the statute of limitations. I do not think it should do that if the payment does not, at least, take the debt out of default, but the courts haven’t listened to me on that one. Make a payment on an old debt and, voila, you have a new debt.

Don’t Pay Unless You Have a Plan

So with all that in mind, what do you do? I would suggest that there’s never a moral reason to pay a debt collector – it’s like feeding rats, and do you really want them to multiply? But there could be times when you might want to either for moral or practical reasons. If so, you must know what you’re doing. Your payment will revive the debt. Do you know how you will pay it? Do you have a reason to pay the whole thing? I would be extremely cautious in this as you are subjecting yourself to liability to a group of people more willing to destroy you than almost any other group.

I’d say don’t do it 99.99% of the time.

Protect Your Rights

Even if you are reading this article late in the game, shortly before trial, and you are not already a member, you should consider doing so. We have materials helpful to last minute defense and trial preparation even if you are facing this rule.

If it’s a little earlier in the lawsuit, or if no suit has yet been filed, you have many other options. Membership can present you many benefits and help you win your case. Or you could check out some of our e-courses.

 

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Never Make Partial Payments on Old Debts

Partial payments are almost always a bad idea on old debts. They (almost) never accomplish anything good for your relationship with the creditor or for your credit report. And they can cause massive problems for you because they revive the debt.

What You Should Do If You Get Called on an Old Debt

What you should do is find out who, exactly, is calling you. Find out the company and the individual. Then listen to what they say. If it is convenient, record the conversation. If not, take notes. Ask questions.

What You Should NOT Do

A 20 year old debt, not paid for 20 years, is beyond all statutes of limitations in all jurisdictions of which I am aware. However, you still “owe” the debt in some theoretical way. It remains a “debt,” and that turns out to be important. That’s because it can still be “revived” by any kind of payment.

You should know that they can’t sue you for such an old debt unless you revive it.  They can’t hurt your credit report if you don’t pay it. And they can’t do anything good for you if you do pay it.

In my opinion, you should never pay such a debt. Unless you have a particular reason. A good reason might be that you need to do business with them and they have a policy of not doing so if you owe them money (utility companies are like this).  So those situations might be different, but you still need to be careful.

Fair Debt Collection Practices Act

Just listen to what the debt collector says.

Let’s say he threatens to sue or tells you anything contrary to the above about hurting or repairing your credit. That would violate the Fair Debt Collection Practices Act (FDCPA). It is illegal for a debt collector to threaten you with action that he either does not intend to do or could not legally do. It is also illegal to deceive you about what he might do FOR you.

Suppose, however, he tells you that they can’t sue you, but that you still owe the money, and “wouldn’t it feel better” to pay it? Some people might say they have no money, and so the debt collector tells them, “No problem, you can just make a partial payment. Then, if you ever get any more money, you can pay some more…”

That also violates the FDCPA in my opinion because it is deceiving you and trying to take advantage of something most people don’t know. If you give someone a gift and say you’ll give them more later, that creates no obligation to pay. If you make a partial payment on a “debt,” you revive the debt and can be sued on it again. Even one that is many years past the statute of limitations and beyond causing you any harm,

Suggesting Partial Payments is Sneaky

Debt collectors are often trained to take advantage of people’s ignorance and to suggest partial payments on debts that are beyond the statute of limitations. If they try to get you to do that without telling you that you will revive the debt by doing so, they are misleading you. And that violates the FDCPA.

Partial Payments Revive Old Debts

By making the partial payment, you will revive the debt against you in its entirety, allowing the company to harass and sue you, and possibly even to damage your credit report again. Never, ever do it. Instead, take careful notes, and then go find an FDCPA lawyer to sue them.

If they get it all right and tell you that a partial payment would revive the right to sue you, tell them to go away and never call again. If they do, get a lawyer and sue them for that.

Other things to know

Partial payments will not just revive a statute of limitations after it has passed – it will extend it if it has not passed. Thus if the debt is five years old and getting close to the statute of limitations, your part payment will start the clock ticking again all over.

If you are being harassed or sued for a debt and need more information, be sure to check out our products and materials at Your Legal Leg Up. We have everything you need to protect  your rights.

Judgment Proof – Letting Debt Collector Know Helpful Facts

What if there is something you actually want the debt collector to know because you think it will cause it to leave you alone?  How do you tell them so they’ll believe you when you say you’re judgment proof?

And how do you keep the judge from hearing it and deciding not to take your case seriously? This article discusses the fine art of negotiating when you think you have “nothing to lose.”

How do you Tell the Debt Collector You’re Judgment Proof?

You’ve heard the saying, “you can’t squeeze blood from a turnip.” If you don’t have money a debt collector could reach or a job they could garnish your wages from, or any other assets they could reach, you are what is called “judgment proof.” How do you let them know so they believe you and go away?

If you’re Judgment Proof if Makes No Sense to Sue You

If you’re judgment proof, you almost certainly want the debt collector to know it because it makes all their work more or less pointless. At a minimum, if you don’t have anything for them to collect, they will have to wait – possibly a long time – to get anything back from the lawsuit, and debt collectors know well that time is money. There are generally better things for them to do than chase after people who really are judgment proof and have nothing to give them.

But it isn’t enough for you just to “tell” them you’re judgment proof.  It’s too “convenient” for you, and they won’t believe it if you tell it to them too easily. Plus – if you make it too easy, they’ll just get the judgment and sit on it. They’ve already spent something to buy the debt and bring suit. They have to know it will cost them more to chase you – and that it will keep costing even though they’ll never collect anything back from it.

In this article we discuss one of the fine points of negotiation: how to let someone find out something you want them to know – in a way that will make them respond the way you want them to respond.

Here’s a little warning: Unlike a lot of what we say, this will be more the “art” of negotiation than the “science” (so to speak) of law. You might have a different feeling about it, in which case you should think about it for yourself. Put some thought into it and come up with what you consider your best strategy – you’re the one who’s going to live with whatever happens, right?

The Situation: You’re Judgment Proof

You don’t have any money and don’t think you’re going to get any for a while. You want the debt collector to know that you’re judgment proof because you want them to go away.

But there is a “hidden” problem.

Being Judgment Proof Can Mean to the Judge that You Shouldn’t Defend Yourself

The law is much more practical than a lot of people give it credit for being. If you say you have “nothing to lose,” and the judge believes it, you may find yourself losing very quickly and without real fairness or equality. After all, the judge thinks, you have nothing to lose, so why bother? Really. That’s eminently practical, isn’t it? It is the way many of them think.

Most judges won’t say that, although some will. But who wants to waste his or her time on technical fairness when there’s nothing really at stake? The law is not designed or supposed to do that.

You Won’t Be Down Forever

But the fact is, you DO have something to lose. A lot. The worm turns – you may be down now, but however far you’re down now, it only takes a few good breaks, a couple things turning around, for you to be much better. Good luck often happens to people who keep trying their hardest and looking for it, and if it happens for you, let the good luck be for you and not the debt collector. You need to keep fighting even if it looks like you have nothing to lose. You MIGHT, and that’s enough.

Judgments last a long, long time, and do you want the break that could turn things around for you to enrich the debt collectors?

Losing May Hurt you in Ways you Haven’t Considered

The other thing is that the cost of losing may be greater than you suppose. It will hurt your credit report and raise all your costs of living in invisible ways, and… there are other costs, psychologically and socially.

Play to Win

Play to win. If you’re here, you’re already doing that. Don’t blow it now by casually telling anybody you have nothing to lose.  But you still want them to know you’re judgment proof. So how do you let them know?

You make them bleed for it.

Make them Pay for Any Information they Get – Even if it’s What you Want them to Know

Letting them know that they won’t gain anything from their efforts is really just half of your goal. The other half is that they must know that they will have to use a LOT of effort, and that it will cost them a lot of money (money they’ll probably never get back). Make sure they know that you will never give them anything without a fight – a fight that’s going to cost more than they could ever hope to win.

Can’t you just tell them that?

It’s better to show them how much effort will be required first. And that’s because talk is cheap. Lawyers should know, right? And they do. Telling them it will take effort is far, far different than requiring them to spend that effort. Of course, it takes far more effort on your part, too. It means you fight everything tooth and nail – don’t give them any information they aren’t entitled to, even when it’s what you want them to know. And if you watch them, you’ll see they don’t plan to give you even information you are entitled to. Fight hard.

How Much you Have, Where you Earn it, and Where you Keep it are “Irrelevant” to the Debt Collector’s Lawsuit

As we have often pointed out, contract cases involve what’s called “strict liability.” Almost. That is, there is only the question of whether you owe the money. No one cares WHY you owe the money or why you haven’t paid it off. No one even cares, legally, whether you can pay it off. The only legal issues for the court to decide on a debt case are: do you owe it to them? And, how much do you owe? That makes the amount of money you have (what you own), where you earn it (your job), how much you earn (your income), or where you keep it (your bank) all irrelevant. You should object and force the debt collectors to go to the judge (motion to compel) to force you to give it to them if they can.

Make them work to get it. Make them work hard and spend money. And then, if you have to answer, you will. It is, after all, what you wanted them to know in the first place. And if the judge denies their motion to compel and does not make you reveal the information about not having money or a job, you can just “drop it” into a conversation with the lawyer for the other side afterward (“Well, I don’t have any money anyway…”). But then you don’t give them proof – you just say it.

If you tell the other side you’re judgment proof too easily, the judge will find out. She will be tempted to find an excuse to rule against you as we said above. Fighting hard from the beginning – especially against divulging financial information – puts the lie to that more effectively than anything you could say. It proves you are taking the case seriously.

Watch out for Laziness

So now, consider your motives here. Isn’t a main reason you want to tell them you’re judgment proof just that you want them to go away without bugging you anymore? You’re tired of your troubles and the suit?

That’s the attitude you must beware of.

Yes, getting them to believe you are judgment proof might cause them to drop the case and reduce your overall effort and inconvenience, but your main weapon in debt litigation is the willingness to spend extraordinary efforts – and to make them do so.  And this is true whether the underlying debt was ever yours or not – it takes extraordinary efforts to defend any case. Don’t give up that weapon in the search for a short cut.

Make sure the things you do increase your chances of winning without hurting your underlying case.

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About Your Legal Leg Up

Your Legal Leg Up is a business dedicated to helping people fight debt collectors without having to hire expensive lawyers to do it. We offer you everything you need to defend your rights – with special help through our membership services to help make the process smoother, easier, and less worrisome. YourLegalLegUp.com has been in operation since 2007. Before that, Ken Gibert practiced law representing people being sued for debt among other types of consumer law.

If you would like to get a personalized evaluation of your situation, follow this link: https://yourlegallegup.com/pages/evaluation.

For further help, consider our Manuals and Memberships. We have materials on debt negotiations and settlement, forcing debt collectors to leave you alone, credit repair, and many other issues that arise when you are facing debt trouble.

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Verification or Validation – Using Both FDCPA and FCRA to Protect Your Rights

A smart person disputes and requires verification
A smart person disputes and requires verification

Verification under the FDCPA and FCRA – Use Both to Protect Your Rights

Three are two kinds of verification. Knowing and using them both can help protect your rights. Both the FDCPA and the Credit Reporting Act give you rights of verification. They are different, though, and you can use both. You probably should.

Two Kinds of Verification and How to Use them to Protect Your Rights

We have spent much of our time talking about “verification” on our site and videos. What we have usually meant has been the “verification” process provided by the Fair Debt Collection Practices Act (FDCPA). But there is another kind of validation you can use – validation as permitted by the Fair Credit Reporting Act.

We talk about that below and discuss how you can use both forms of validation, together or separately, in defending yourself from the debt collectors and in repairing your credit.

Verification under FDCPA and FCRA are Different

The two kinds of verification are different rights. They apply in different circumstances, to possibly different “persons” under different circumstances. They also give different rights and have different time requirements.

You can use them both, but they are completely separate. It is important to keep them straight.

Make sure you keep track of everything you do under either statute. And you need to make sure that the response you get is appropriate for the specific right you invoke.

Rights under the FDCPA

Under the FDCPA, when a debt collector first contacts you it is required by law to notify you of your right to dispute the debt and require “validation.”  The two words (validation and verification) are used interchangeably, and the requirement is quite simple in general.

  • First, the debt collector must notify you within five days of your right to dispute within 30 days. It must also give the “mini-Miranda” warning – that anything you say may be used for collection of a debt.
  • And then, the debt collector must “verify” the debt if you ask within the thirty days provided.

Just to make clear, it is YOU who have 30 days to dispute after getting the notice of your rights. The debt collector does not literally even have to do anything at all and also has no time limit. However, if you dispute and request verification, it cannot make further attempts to collect on the debt until it has verified it.

Exactly what verifying it is, is not exactly clear.

It would appear that contacting the original creditor and “establishing” that the debt is yours would be enough. The purpose of the requirement is not to require a separate lawsuit, but just to protect consumers from harassment based on typos or mistaken identities. The debt collector has to take some action to connect you to the debt if you dispute it under the FDCPA.

Even this low burden often seems to be too much for the debt collector. Possibly that is because the second owner of the debt (if there is one) has no relationship to the original creditor and simply cannot get the debt verified.  Whatever the reason, asking for verification is often enough to make them go away. If they try to collect without having verified, that violates the FDCPA. And that in turn might allow you to stop a lawsuit brought against you.

Remember, however, that when the debt collector immediately files suit against you, this is not a “first contact” which triggers your right to notice and dispute. If you get served, you have to answer (or move to dismiss). It is not enough to request verification.

Disputing under the Fair Credit Reporting Act

There is another kind of validation, and it is completely different from the FDCPA. You can still can use it to fight debt collectors, thought. It is the validation provided for by the Fair Credit Reporting Act (FCRA).

This is your right to “dispute” a harmful item on your credit report.

You do this after looking at your credit report and seeing something that is not positive. Let’s say you see a debt collector reporting that you owe a debt. Remember your right to verification under the FDCPA comes when the debt collector first contacts you to try to collect the debt. You can dispute a line item on your credit report at any time.

There are rules, and there are better and worse ways to do it. But the Credit Reporting Act does not depend on the other side being a debt collector or having tried to collect the debt. It simply requires that they have put some bad information on your credit report.

When you seek verification under the FDCPA, the debt collector has to verify the debt before making further attempts to collect. When you “dispute” the debt under the FCRA, it doesn’t affect collection. Instead, you are forcing the company to “investigate” the debt and show that what it is telling credit reporting agencies is true.

What FCRA Accomplishes

If the company reporting you cannot validate the debt, it is just required to withdraw the offending credit reference. But it could still try to collect the debt.

If it does keep trying to collect the debt after withdrawing a bad credit reference, that might be a type of admission that it can’t prove the debt if the case goes to a lawsuit.

But it probably isn’t controlling on the case because “validation” of a credit report is not

the same thing as proving that the debt is valid.

A Helpful Strategy

Here’s a strategy that might be helpful. If you receive a bill from a junk debt buyer – a company that bought your debt from the original creditor, in other words – you should

send a request for verification under the FDCPA right away. Then you should and get your credit report and look at it.

If the debt collector is reporting your debt on your credit report, you will want to dispute the credit report and seek validation under the FCRA. Separately.

Remember these are completely different rights. Your sending two different disputes may confuse the debt collector, so that may be good for you. Remember that under the FDCPA it must provide proof as to your identity and its right to bug you, while under the FCRA it must explain why the information it put on your credit report was correct. If the debt collector does not verify under the FCRA,  you can clear your credit report.

FCRA Dispute May be Helpful to Debt Defense

If a debt collector  DOES try to validate, it will probably give you information that it would object to having to provide in a law suit. So it’s a shortcut to some discovery in that situation.

Using FDCPA and FCRA

You should not try to do the FCRA verification first because it takes too much time.

To do the credit dispute right you have to get your credit report and dispute it with the credit bureau before you dispute it with the debt collector under the FCRA if you want to protect all your rights. You don’t have time to work your way through the FCRA before asserting your FDCPA rights.

On the other hand, if the company does not verify under the FDCPA, that would be worth mentioning as a basis for your credit dispute.

We should add that when you get the first letter from the debt collector you may not even know whether it is reporting you on your credit report. They often do not, so you won’t know whether or not you will have anything under the FCRA. But if they are contacting you, you have the right under the FDCPA. Since it only lasts for 30 days, you need not to delay in disputing.

We always recommend sending your disputes by certified mail (and keep all the proof). You don’t have to do this legally, but these things often come down to a question of what you can prove, and having proof from the postal service is a very good investment.

 

Fair Debt Collection Practices Act (FDCPA)

The Fair Debt Collection Practices Act (FDCPA) is the centerpiece of legal protections for debtors against debt collectors. The law passed in its essential form in 1977, and its goal was to protect debtors against the abuses of debt collectors. This article discusses what makes this law great, and some of its limitations.

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The Fair Debt Collection Practices Act

The Fair Debt Collection Practices Act (FDCPA)  was enacted to put an end to some of the worst practices of the debt collection industry. It’s been a very good law, but the debt collectors are still doing many of the things the law was designed to prevent. You may be able to sue them or stop them from suing you.

The Debt Collection Industry

Before the act, the debt collection industry routinely engaged in the most abusive sorts of behavior imaginable. They would call debtors at all hours of the day or night and subject them to streams of cursing and name-calling. They would discuss their debt with children, neighbors, and employers. Debt collectors also frequently misrepresented themselves as attorneys and threatened legal action which they were powerless to initiate. And they often attempted to, and did, collect debts that either never existed or were long unenforceable because of statutes of limitation or bankruptcy.

Whatever the staid spokespeople of the debt collection industry may say, this is the background of their industry. The Fair Debt Collection Practices Act, 15 U.S.C. Section 1692, et seq., was enacted to put a stop to these extreme behaviors in 1977.

But debtors are underrepresented by lawyers, however. And there has been an explosion of debt over the past decade. Thus, many of the old abuses still continue.

The FDCPA: A Pretty Good Law

Nevertheless, the FDCPA is in many ways a model piece of legislation. What makes the law so powerful is that, in addition to making certain enumerated acts illegal, the Act also more generally makes acts that are “oppressive,” “false or misleading representations,” or “unfair practices” illegal. This means that, whereas in most laws, the would-be wrongdoer is free to craft his actions around the specific language of the law and find “loopholes,” under the Fair Debt Collection Practices Act, at least, the consumer may argue that these actions are still unfair or oppressive. The Supreme Court has ruled that an “unfair” act can be shown by demonstrating that it is “at least within the penumbra” of some common law, statutory “or other established concept” of unfairness.

That’s pretty broad. The price for this flexibility, however, is that the remedies—what you get if you prove the case—are less powerful. And this may be why the practices are still occurring today.

As mentioned above, there are specific actions enumerated in the FDCPA, and these include most notably, suing on expired debts, filing suit in distant jurisdictions, publishing certain types of information regarding the debtor, calling outside of specified hours. And the list goes on. If the debt collector is acting in some highly offensive way, chances are he’s within the specific provisions of the Act. These can be found at 15 U.S.C. 1692c, d, e and f. You can find the specifics by Googling the Act or provision and determining whether the specific action you’re concerned about is within one of these provisions.