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Uniform Commercial Code – NOT a Key to Debt Defense – Myths and Facts about the UCC

There seem to be many people who think that the Uniform Commercial Code (U.C.C.) offers special protections from debt collectors.

Like the Strawman theory, however, the U.C.C. is a slender reed to support your hopes of avoiding or defeating creditors and debt collectors. Because in fact it does essentially nothing to help. We’ll discuss the U.C.C. and then tell you what you should be doing instead of tripping over strawmen.

What is the Uniform Commercial Code?

Because of the times we live in, most people think of themselves in terms of their nationality. While most people do know that some states have different laws than other states, our daily lives rarely expose us to these different laws and their consequences.

It wasn’t always that way, though. Up until the 1930s, perhaps, state laws had priority in most people’s lives, and those laws could vary pretty widely. It could be hard to know where to sue someone or what laws applied to specific actions. And that’s still true, to an extent, but since the 1930s it has been progressively less true, as the federal government has grown in size and function.

Another reason the states have worked together more smoothly has been the UCC. There are many “uniform” laws, and they function mostly the same way. What happens is that some think tank convenes a task force and asks it to codify existing (state) laws and make recommendations as to where those laws might be changed to become more uniform or fairer.

There’s a good reason for this. Laws can grow like weeds, and bringing uniformity to them can help people plan so they can know what to do.

Who Made the U.C.C.?

The U.C.C. was created by two nongovernmental legal organizations: The National Conference of Commissioners on Uniform State Laws and the American Law Institute.  The document, standing alone, has no legal authority or power at all.

I’m not saying the UCC is not significant – I’m saying that it is a document created by a bunch of academics and has no independent force or impact on anybody.

Why the U.C.C. Matters

So why is the UCC a big deal? It’s a big deal because all the states have adopted some portions of it. But not all states have adopted the same parts of it. You see, the drafters of the UCC knew that states had different laws on certain things – laws that had evolved over time and not accidentally. The UCC was designed to help legislators bring order to what was there, not force them to have the same laws. Remember, legislatures make laws, not think tanks.

If parts of the U.C.C. have become law in your state, they will be reflected in your state laws, and you should look for the law in your state laws and not the U.C.C. itself. Likewise, I trust you can see that since the portions of the UCC that were adopted are just part of your state law they do NOT trump other laws and have no special, magical power.

To repeat, the U.C.C. is just a document created by academics. And the main concern of the drafters of the U.C.C. were the rights and abilities of businesses, not people.

Help for People Harassed or Sued by Debt Collectors

When people say “the U.C.C. does this or that,” or “requires this or that,” they’re showing you they do not really understand the law. Don’t look to these people to tell you how to beat the debt collectors.

You CAN beat the debt collectors in many cases, and without even having to hire a lawyer – but your solutions will most often be in consumer protection laws like the Fair Debt Collection Practices Act or Fair Credit Reporting Act, or in the normal rules of the court.

We help you do that.

Assignment Contracts – Holy Grail of Debt Defense

An assignment contract provides the “terms and conditions” of mass debt sales. If you can force the debt collector to give it to you, you can make a lot of progress in defending yourself.

Making the debt collector give you the actual Assignment Contract is BIG

We say that there are “no magic bullets” in debt defense, but every so often we find a few things that seem almost like they would or should be. However, the sort of “magic bullets” we refer to, and that don’t work, are simple, formulaic things like writing the word “refused” on the summons or claiming that it is illegal to use your name, or that using all capital letters matters in some way. Some people think these things have magical attributes that will bring you easy victory. In fact, they really have no legal significance,[1] and spending energy on them is more likely to hurt your case than help it.

Certain things, however, can make a dramatic impact on your case. They won’t magically end the fight or reliably make the debt collectors go away all by themselves, but they can make a big difference if you know what to do with them. One of these things is the Assignment Contract, the agreement assigning the debt in question from the original creditor to the debt collector. In many cases, winning the fight to obtain discovery of the assignment contract will win the case outright.

What is an Assignment Contract?

An assignment contract is the contract between the original creditor and the debt collector whereby the original creditor sells debts to the debt collector. Selling debts is perfectly legal and is a widespread and commercially reasonable thing to do. Unless your contract with the original creditor prohibits transfer or assignment(very rare in consumer debt), there’s nothing wrong with doing it.

You don’t expect these things to be done on an individual basis, though, do you? No. Consumer debts are bought and sold by the hundreds of thousands at a time. The original creditors – often banks, utilities like phone companies, or gyms – create “portfolios” of debt which they sell to junk debt buyers according to certain terms. These terms are found in the assignment contracts, and assignment contacts are not little things. They are lengthy contracts of 20-30 pages that apply to all of the debts bought and sold in a given transaction.

The assignment contracts set the rules for what the debt collector can get from the original creditor if it needs to sue to collect the debts, how long the original creditor has to provide the material, and how much getting that information will cost. The contracts have many interesting features, and the debt collectors will assuredly NOT want you to see them. In fact, in many cases, the debt collectors would rather dismiss their case against you than let you see the contract.

Not Bills of Sale

Assignment contracts are not bills of sale. The bill of sale is a one-page document that says something “All the debts identified in Exhibit A, attached, are hereby sold and assigned to Company X.” As we have often pointed out, debt collectors often hate to provide the bill of sale or, more often, the accounts subject to a bill of sale.

They REALLY don’t want to give you the assignment contract.

What the Assignment Contracts Contain (that Debt Collectors Don’t Want you to See)

There are two main things the assignment contracts contain that debt collectors do not want you to know about. They don’t want you to know what they think of their own records, and they don’t want you to know how much time, and how much money, it takes for them to obtain records from the original creditors.

Debts are Sold “As Is”

As you will notice if you take the time to read through the assignment contracts, original creditors sell debts to debt collectors “as is” and without any warranty. Specifically, that means that the original creditor specifically disclaims any guarantee that the debts or supporting information they’re selling to the debt collectors are legitimate, accurate, or trustworthy. The natural and intuitive conclusion to be drawn from that is that the records are NOT reliably accurate. Nevertheless, some courts have ruled that they are sufficiently trustworthy to justify admission of the documents in question. The argument needed to use lack of warranty is therefore sophisticated.

Documents will Take Time and Cost the Debt Collector Money

Another important fact about the Assignment Contracts is that they usually establish that the debt collector can obtain certain specific documents from a certain, very small percentage of debts. And the original creditors give themselves a minimum of sixty (60) days to provide requested information upon receiving the request. Both of these facts are hugely important to people representing themselves pro se – and for the pro se movement at large.

Sixty days is longer than the amount of time permitted in any state’s rules of discovery of which we are aware. That means, in plain English, that if you request documents, the debt collector will never be able to provide you documents within the time permitted by law. They can get extensions – the courts are generous with time, normally – but even with extensions they may not be able to provide the documents within the required time. Therefore, you should push hard to get the information.

It may even be that in California this arrangement violates the California Rules of Civil Procedure – and you have an even more powerful weapon at your disposal to attack their case.

It is also extremely important to the pro se movement as a whole, and to everyone in it individually, that the original creditors charge for documents and only require themselves to provide documents in a small percentage of the debts. If EVERYONE asked for documents, the costs would simply bury the debt collectors, and the delays would likely make it impossible for them to answer discovery at all. They would have to change their whole way of doing business.

Another Way to Attack the Debt Collectors

You don’t have to have the Assignment Contracts to make life harder for debt collectors and better for you.  If the debt collectors after you are among the many who use credit damage as a collection tool, you can start the ball rolling even faster than through formal discovery. If you get your credit report, find them on there, and dispute the debt under the Fair Credit Reporting Act, they will have thirty (30) days to “conduct a reasonable investigation” into the dispute. Since they can’t get access to information in most cases in less than 60 days, they will either have to withdraw the negative information or you will have a lawsuit against them. Since the FCRA gives you attorney fees if you win that suit, you could get a lawyer to do a lot of the work for you.

And if they do withdraw the reference, you can use that against them in your defense in their suit against you.

Press – Hard – for the Assignment Contract

Under all the circumstances, it makes a lot of sense for pro se defendants (and everybody else being sued for debt) to use the discovery process to get the assignment contracts. The debt collectors do not want to provide this to you, and they will lie about its existence, deceive you if they can, and stonewall you to the limits of their ability if you push for it.  We are developing tools for our members to use to make this fight a little easier.

[1] There are groups of people who energetically claim that things like this make a difference. They are unable to point to a respected authority (like a court opinion) that backs them up, but this doesn’t stop them.

Supreme Court Attacks FDCPA – Defending Pro Se in Debt Defense Cases

Defending pro se may have just become an even more important option for debt defendants.

The Supreme Court has recently damaged debt defendants’ rights with two very important decisions. These decisions attack the Fair Debt Collection Practices Act (FDCPA). One allows debt collectors to bombard the bankruptcy courts with outdated claims. The other holds that junk debt buyers are not “debt collectors” under one important definition of the FDCPA.  Together, these rulings change the landscape of defense. One thing is clear: you need to know your rights more now than ever.  Defending pro se may be the only kind of debt defense you can get anymore.

Pro Se Defense

Let’s start with what “defending pro se” is.  Pro se means representing yourself in a lawsuit. This eliminates big legal fees, but it ALSO means taking on the burdens and risks of defending yourself. Hiring the right lawyer is the “gold standard” of defense, but hiring lawyers is expensive. Additionally, recent Supreme Court rulings will make it harder to get a debt lawyer at all. Still, in most debt cases people can handle their own defense. The law is not complicated, and debt cases are document, rather than witness, intensive. Defending pro se even has some significant advantages in the debt law context.

Who is a Debt Collector

In Henson et al. v. Santander Consumer USA, Inc., No. 16349 (Slip Op. 6-12-17), the Supreme Court ruled that junk debt buyers are not“debt collectors” under one provision of the Fair Debt Collection Practices Act (FDCPA). I discuss that case, its impact, and what action people need to take regarding it, in my article and video, “Who Is a Debt Collector – Supreme Court Tries to Destroy the Fair Debt Collection Practices Act and what to Do about that.” In general, the effect of Santander is to make it more difficult to establish that a junk debt buyer is a debt collector, and it may signify that the Supreme Court would not let you sue junk debt buyers under the FDCPA at all.

Harder to Get a Lawyer

Santander is going to make it more difficult for you to get a lawyer to defend you in a debt case – and more expensive if you can get one. That’s because the FDCPA applies only to debt collectors and gives you certain counterclaims, and certain defenses, that make defending you easier. The FDCPA also includes a “fee-shifting” provision which allows a consumer to make a debt collector pay for most of the time a lawyer spends on a case. These things – ease of defense and a rich company to pay fees – make FDCPA cases attractive to lawyers. Take away the FDCPA, and the lawyers are going to have to charge more – a LOT more. And they simply won’t take as many cases because they’re harder. This means that debt law defendants, already drastically underrepresented, are going to find it much more difficult to hire lawyers. Defending pro se has become a much more important option.

Debt Collectors Will Run Wild

The decision in Santander threatens to neutralize the FDCPA and let junk debt buyers – who now make up the vast majority of debt collectors – run completely wild. They will be much freer to abuse, deceive, harass – in short, all the tricks that brought about the FDCPA in the first place because the laws regulating them will have been predominantly removed. At the same time it makes getting a lawyer much more difficult, the decision in Santander will likely result in a large number of new and wrong lawsuits. HOWEVER, Santander does not negate any (or very few, anyway) of your defenses in a debt law case, and it does not reduce the burden of proof for debt collectors. You can still win, in other words, but you very well may have to do it yourself.

Bankrupts Beware

Bankruptcy is one refuge debtors have from debt collectors. In general, you can file bankruptcy and force all your creditors to stop contacting you and, instead, file their claims in your bankruptcy action. In theory, the court will then either grant those claims or deny them according to what is right. The dirty little secret of bankruptcy, though, is that if claims are not disputed, they are generally granted. In bankruptcy cases brought by poor people (you can bet Donald Trump never had this problem), the lawyers representing the bankrupts have little incentive to dispute wrongful claims. There’s a U.S. trustee who is supposed to oversee the process and protect the bankrupt and legitimate creditors from bad claims, but guess what?

They usually don’t.

So bad claims get allowed. In most bankruptcies, allowing a bad claim means that it’s going to get paid (eventually) by the person filing for bankruptcy.

Junk Debt Buyers Make Things Worse

Enter the junk debt buyers. They buy LONG overdue debt – debt far beyond the statute of limitations – and file claims in bankruptcy cases. This bogs the bankruptcy courts and everyone involved down. As a practical matter this results in people paying billions to debt collectors who have no right to collect. This crushes people who declared bankruptcy and rips off legitimate creditors whose debts get paid at a lower rate.

Some debtors were suing debt collectors under the FDCPA for filing outdated claims in bankruptcy.  The FDCPA has a “fee-shifting provision,” that means consumer lawyers who win make the debt collectors pay their fees. That gave debtors’ bankruptcy lawyers at least some financial incentive to bring these claims and dispute unenforceable claims. They were doing so as part of the bankruptcy proceedings, and the debtors were also bringing suit outside of the bankruptcy context as well.

FDCPA Does Not Apply In Bankruptcy

The Supreme Court negated the FDCPA’s protection with its holding in Midland Funding, LLC v. Johnson, No. 16-348 (Slip Op. 5-15-17). In that case, the Court ruled that debt collectors could file claims in bankruptcy that they know are unenforceable in an ordinary court (and would violate the FDCPA if filed there).  For a fuller discussion of that case, look at my article and video, “Bankrupts Beware, FDCPA No Longer Applies – Opening the Floodgates to Bad Claims.”

Midland Funding means, in practical effect, that even if you’re in bankruptcy you’re going to have to know and protect your own rights. Your lawyer has LITTLE (personal) incentive to challenge bad claims, and likewise the U.S. Trustee has VERY LITTLE time (or incentive) to do it. If the court allows the claims, you will probably have to pay them in all likelihood. That means that even if you file for bankruptcy you must prepare to defend yourself against the debt collectors. You will AT LEAST need to know your rights, and you will very probably have to defend them pro se despite having a bankruptcy lawyer.

Defending Pro Se

The Supreme Court’s decisions in Henson and Santander mean debt defendants will get much less help from lawyers. These cases are still possible to defend against and win – they’re as easy as any law gets, probably. Because so many fewer defendants will fight, you will probably have even better chances of winning YOURS. It’s less profitable for debt collectors to fight now because they will have so many more easy wins. But you are more likely to have to do it yourself now than ever.

Make it hard for them.

 

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.

 

Gold Debt Defense System
Gold Debt Defense System

Gold Debt Defense

 

Platinum Debt Defense System

Platinum Debt Defense System

 

Diamond Debt Defense System

Diamond Debt Defense

 

Tricky Rule Can Screw Pro Se Defendants

tricky rule can screw pro se defendants
tricky rule can screw pro se defendants

Not All Rules of Civil Procedure Are Logical or Predictable

Tricky rules can prevent you from defending yourself.

Unfortunately, there are a lot of rules of civil procedure which present lurking danger to the pro se defendant or even a lawyer not used to litigating. One of the worst of these tricky rules, however, is one requiring objection to exhibits in advance of trial.

Tricky Rule Screws Pro Se Debt Defendants

The way this “presents” is likely to be you receiving a set of exhibits – or some sort of notice referring to exhibits – from the other side. It may even be so innocent as a statement that “Plaintiff will use the exhibits attached to the petition at trial.” If any of these things happen, or if there are a lot of exhibits in the record in any way, you should beware.

Some jurisdictions allow this list of exhibits as a pretrial submission where, if you do not object to them, they will be accepted into evidence without objection. In other words, this tricky rule will prevent you from making an objection in trial – the very time you would think you needed to object. In a debt case, this will be almost certainly fatal to your defense.

You Don’t Get Much Time!

Debt cases hinge on the ability – or not – of a debt collector to present record evidence of the alleged debt. Since debt collectors did not create those records and in most cases have no knowledge of how they arose or came into existence, one of the debt defendant’s strongest challenges is to attack the use of those records as evidence. You attack their “admissibility.” If you successfully do that, you will likely win the trial. If you fail, the debt collector almost certainly will.

Automatic Admissibility a Trap for the Inexperienced

A tricky rule which allows automatic admissibility is a dangerous poison pill for debt defendants, and you much know whether such a rule exists in your court. As we say, receiving a list of exhibits is a hint, but you should search your court’s “Local Rules” if it has them, and your state’s Rules of Civil Procedure, to find out if you must worry about this rule. If you have it, it’s easy enough to make your objections, but you will have to object prior to trial and on the schedule provided by the rule.

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.

 

Gold Debt Defense System
Gold Debt Defense System

Gold Debt Defense

 

Platinum Debt Defense System

Platinum Debt Defense System

 

Diamond Debt Defense System

Diamond Debt Defense

 

Debt Defense – How NOT to Defend Yourself from the Debt Collectors

Debt defense is a learning process, but it requires effort. And if you are looking for help, common sense is helpful. I received the following email from a person with whom I had never spoken before:

Hello,

Our court trial date is [a date 5 days from the date of email] in [City], California.

We have been sued by Midland Funding LLC. We filed a general denial claim last year.

The 17th of May, fed ex delivered a package from [the debt collector plaintiff] which had a Declaration In
Lieu of Testimony in it.

First of all, in court will I be allowed to read my research?

Second, we have not received notification … like they claim and when we were served last year, I called them and tried to take care of the debt but they kept putting me off.  No one wanted to talk to me about it.  I called them many times and each time they would tell me to call another time.

Third, …

Next, …

Next, …

There are quite a few things that I have questions about.

I cannot afford an attorney or I would let one take care of this for me.

Can you give me any advice?

The above letter, which has been changed to protect identities, was actually sent to me. While I sympathize with the person sending it, it reveals many things you will want to avoid if you hope to win a lawsuit against a debt collector.

You Can’t Waste Vast Amounts of Time

First let me point out that this letter was sent on Friday night, six days before the date apparently set for trial. The lawsuit was filed last year, and this person received pretrial materials a month ago. You MUST NOT WAIT so long before taking action to protect yourself. The letter asks numerous significant questions – some of them good questions, incidentally – and the writer seems to think the answers will enable her to defend herself.

Debt Defense is a Process, not Magic Words or Questions

Debt defense is a process. As I have often explained, you want to get started early, so that the debt collector has plenty of opportunity to give up. Also, it takes time to ask for and get the facts you need, more to understand them, and yet more to make sure you can get the judge to understand. You can’t treat questions as a magical way to win the suit. Facts win suits, and you must do the work to show what the facts are.

It also takes time to learn the law and become familiar enough with it to use it.

This person wasted a solid year before looking for the easiest way out a few days before trial. At this stage, one might be able to get lucky. The debt collector might forget part of its case, might have weaknesses in it that one could show the judge and get him or her to understand. But more likely that the debt collector will be able to gloss over the weaknesses of the case, and the person sued will not have time to understand what’s happening or how to show what needs to be shown.

You can’t wait so long.

You Need to Understand, Not Get a List of Questions to Ask

One of the reasons you need to give yourself time for your case is that lawsuits and courts are different – they have different rules, different cases and precedents, and even different laws. You need to figure these out and learn how to apply them to your own case. Then, you must prepare for the things the debt collector is going to say to try to convince the judge to do something you don’t think he or she should. From the outside, court seems to go slowly. If you’re in it, it goes really fast, and it’s hard to know what to say. It’s hard to keep your head when things come up suddenly under pressure. The only way you can count on getting things right is to work on them before you’re in court.

If You’re Going to Ask for Help…

If you’re going to ask for help, you should carefully consider the situation of the person you’re asking.  You should be polite, and that would include addressing the person by name, using the word “please,” and other basic considerations. Sending a lengthy series of questions with a subject line “Need Answers…” is not considerate; doing it on Friday night with a deadline a few days later imposes too much.

Beyond that, though, is the whole question of what the person is doing. When I get a question, I’m usually willing to offer some help. If you have a lengthy series of questions that will take a considerable amount of time to address? That’s what our membership is for.

Help Evaluating Your Situation

Get Some Help Dealing with Debt Collectors
Get Some Help Dealing with Debt Collectors

Many visitors to our site are facing dramatic new situations:

  1. You may have just found out you’re being sued; or
  2. You have either received a debt collection letter or some other “threat.”

We can help. We can take a look at your situation and the material you were sent – whether it’s a letter or a lawsuit – and give you a roadmap of what to do. It isn’t legal advice, but think of it as a sort of “guided tour” of where you need to go and what you need to do. It will save you a lot of time, wasted energy, and anxiety. And you’ll come out of it with a good idea of what you’ll need to do to set things straight.

Being Sued?

If you are being sued, we can help you get oriented to the case. People ask us all the time whether they should file a motion to dismiss or Answer, and whether or not there are any potential counterclaims to the lawsuit. If those are the sorts of questions YOU have, this is a way to get a head start on figuring out the answers.

Being Harassed or Called or “Dunned”

But what if you aren’t being sued and have just received a phone call or two, or letter?  We do have a lot of information on the site to help you evaluate your situation yourself and figure out how to protect your rights, but if you’d like something a little more specific, you can now use this service, too.

Get Help

We have products and information you will need in the earlier stages of debt problems. The most important thing to remember is this: anything you do that makes it easier for them to sue and win also makes it more likely that they WILL sue you. What does that mean? It means that if you admit owing the debt, having made payments or anything like that, and if you tell them where you work or bank, you make it more likely you will be sued. You might think you are being “responsible” and appropriately cooperative, but it works differently in law and debt.

You will find materials on site that will help you navigate this stage of the problem, but if you want some more specific guidance on what to do given the things they are telling and send you, this product is for you.

If You Need Help

If you need one of these services, just click on this link and select the service you need. Note that clicking on the link will take you to our “home” site, Your Legal Leg Up. If you need a “rush” job (service in under 72 hours), be sure to go to the products page and order that as well. You will be given instructions with your receipt on what to send and how to do it – we will need images of the documents you have received as well as answers to certain questions. After you give us that information, we will have an analysis back to you within 72 hours (three days). If you need faster than that, you can order the “rush” service, although we do ask that you NOT do this unless you need it.

Jurisdiction – Why it Matters in FDCPA and Foreclosure

jurisdiction could mean difference between losing home or not
jurisdiction could mean difference between losing home or not

If someone is trying to take away your house for nonpayment of some debt, the Fair Debt Collection Practices Act (FDCPA) may – or may not – be useful to you. The law differs according to jurisdiction, and you will want to choose the one that gives you your best chance.

This article is a very basic primer on the interaction of state and federal jurisdiction when it comes to debt collection generally, and foreclosure more specifically. Wherever you live, you will want to consider both federal and state cases on applying the FDCPA to foreclosure if you want to sue a debt collector for its acts in taking, or trying to take, away your house.

Most Debtor-Creditor and Property Law is “State” Law

In theory, federal law only applies to areas of the law designated by the constitution, whereas everything else is controlled by state law. That can lead to confusing results where those interests overlap. In general, the laws creating and enforcing property rights (e.g., contract rights, debt, or property ownership rights) are state law. If you get sued for a debt, the action will almost certainly occur in a state (as opposed to federal) court. Foreclosure rights are also determined by state law.

Debt Collection Is a Special Situation

Claims under the FDCPA can be brought in either state or federal court. While property rights are creatures of state law, debt collection was considered so extensive a problem that it was a national (i.e., federal) problem. Thus Congress carved out a piece of debtor-creditor law for itself when it enacted the Fair Debt Collection Practices Act, which makes certain actions taken by debt collectors (primarily) illegal. The FDCPA is federal law, in other words, but as it happens it provides that it can be enforced in either federal or state courts.

Because of the way the federal and state law systems mesh, you could conceivably defend a collection action or foreclosure in state court by filing a counterclaim and seeking an injunction, by filing a separate action in state court under the FDCPA, or by filing a federal claim under the FDCPA and seeking an injunction in federal court. Likewise you could defend or settle a state collection action and then bring suit under the FDCPA in federal court (although remember that the FDCPA has a one-year statute of limitations). All of these variations occur quite often.

States are Independent of Each Other

The state law of the court in which the suit is brought will always determine some the procedures in the case and usually the actual “substantive” rights. Under certain circumstances other state laws might also apply (this comes up most frequently where there is a contract that specifies the state’s law that will apply). State laws and procedures can be different from state to state. If you live in Tennessee, you will be subject to the state laws of Tennessee, and these may (or may not) be very different in some important way than the laws of Pennsylvania, for example, or any other state.

If you are pro se (representing yourself), therefore, your first action must be to determine which state laws (and of which states) apply to which parts of your case at the basic debtor-creditor level. In other words, if you are being sued on a credit card debt, is the company suing you under the law of your home state? Or is it suing you under the laws of some other state? In foreclosure law, it will almost always be suing you (or foreclosing without suit) under the law of your own state.

The courts of one state are not bound in any way by the courts of any other state when they are dealing with their own laws, but they are subject to state courts of appeals and the state supreme courts (and sometimes in certain areas of the law, the U.S. Supreme Court).

State Courts are Independent of Federal Courts, too

Things get a little more complicated when it comes to state courts applying other states’ laws or federal law. In a general sense, they “should” determine what the appropriate court applying its own law would do. In reality, there is usually no appeal to those courts, and so the decisions can vary widely.

The Federal Law

The federal system is similar to the state system, except that eventually they all answer to the Supreme Court. That is, when the Supreme Court has spoken, all the federal courts are supposed to make decisions which are consistent with what the Supreme Court says. Because cases are always decided on the narrowest set of facts possible, and because there are so many laws and cases, however, the Supreme Court often will take many years before deciding a given issue. That leaves the lower courts to guess what the Supreme Court would say. One area where that is happening right now regards whether the FDCPA applies to foreclosure. Eventually the Supreme Court will decide one way or another, but until that time, the lower courts apply the law as they see fit. Sort of.

Each Federal Circuit Controls the District Courts below it

The federal (civil) judicial system is divided into three levels: district courts (where lawsuits are filed and tried); courts of appeal (“circuit courts of appeal”) and the Supreme Court. As described above, all courts answer to the Supreme Court. Below that, the federal circuit courts of appeal control all the district courts below them. Appeals are expensive, specially to the Supreme Court, and they are hard to win. Therefore it is vitally important to win, if at all possible, at the trial court level.

How the Different Jurisdictions Interact

Because the federal circuits are independent of one another, and the states are independent of one another and the federal courts, different places develop different rules arising out of the same law. A perfect example of that would be the way the 3rd, 4th and 9th federal circuits (and all the district courts below them) allow FDCPA claims against foreclosers, whereas the 7th and 11th federal circuits limit those rights. The states also vary from each other and the federal circuits.

Forum Shopping

What all those different decisions mean is that if you are being foreclosed on and think the FDCPA applies to your case, you need to “forum shop.” That is, after determining the state laws that apply to the foreclosure itself, your second task is to determine whether or not your state applies the FDCPA to foreclosure. If not, then does your federal circuit? You will need to look at the law for each and decide where to bring your claim. You can bring it in either federal or state law – you should bring it in the jurisdiction that seems most likely to apply the FDCPA to your foreclosure. Although this isn’t necessarily easy to tell, it can make or break your case, and you need to consider the question as a part of your initial strategy.

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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