Tag Archives: debt law

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

 

Judgment Proof – Letting Debt Collector Know Helpful Facts

Letting debt collector know you're judgment proof
If you’re judgment proof

What if there is something you actually want the debt collector to know because you think it will cause it to decide 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.

Click here to sign up for our free newsletter, Fightdebt.

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.

Credit Reporting Act: Repairing Credit after Debt Litigation Part 1

Life after Debt Litigation

You probably know that I am a big believer in the importance of filing a counterclaim. As I mention in the featured question section this month, having a counterclaim gives you some very important control over the lawsuit itself and whether you get sued or harassed again by the same, or a different debt collector. If you do not have a counterclaim, the debt collector is free to drop the case at will in most jurisdictions. Your counterclaim prevents this.

There is also another reason relating to your life after litigation: Repairing your credit after the lawsuit.

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Holding the Collector in the Suit

Our Life after Litigation section here is related to the featured question: “How do you keep the debt collector from just dropping the case and selling your debt to someone else?”

If you’ve read my articles or watched some of my videos, you probably know that I am a big believer in filing a counterclaim. As I mention in the featured question section, having a counterclaim gives you some very important control over the lawsuit itself and whether you get sued or harassed again by the same, or a different debt collector.

Protect Your Credit Report

There is also another reason relating to your life after litigation. Let’s consider your credit report. You may not know it, but when a creditor or debt collector sells your debt to someone else, it should report that information on your credit report. That way, if the next company down the line reports you, it is clear that they are doing so on a debt that someone else previously owned. And this in turn prevents one “bad debt” from looking like several apparent bad debts. After reporting you initially and up to the point of charge off, the original creditor should not be adding information to your file. That is the right of the next person who obtains the debt. Another way of putting this is that only the person to whom the debt is currently owed has a right to report information about that debt.

Why is this important?

It’s important because if you force the debt collector to settle a debt as a dismissal “with prejudice,” you terminate the debt collector’s right to collect. You also end its right to report the debt as a debt. That is because it, and any subsequent owner of the debt, is bound by what is known as “res judicata” (or more commonly now called “collateral estoppel”). Basically what that means is that once a court has ruled on the validity of the debt – that ruling will apply no matter who later owns the debt.

What do you do with that?

We’ll discuss how you can use the Credit Reporting Act (also called the “Fair Credit Reporting Act) to force debt collectors to remove negative credit references from your record once you’ve beaten them in a debt lawsuit in Part 2 of this article. You can get the rest of this article by clicking here: Using the Credit Reporting Act.