Tag Archives: fair debt collection

Excuses in Debt Defense Will Lose Your Case

Making excuses will lose your case
Making excuses will lose your case

Sincerity vs. Integrity

Making excuses in debt law cases is a good way to lose your case.

The “iron law of cause and effect” applies to everything. What this means is that, for every action, something happens as a result. No matter why it happened, if it does happen, there are consequences. There are no free lunches. Ever.

You know that. But it’s easy to forget when things get tough.

We pretend the iron law of cause and effect does not apply to us all the time. If we’re late, we apologize, and that’s usually enough to get past the other person’s anger or hurt feelings. If we apologize sincerely enough or give enough good reasons, it seems like we get away with it. But it isn’t called the “iron law” for nothing. Even if the other person excuses us, he thinks we are less dependable. And if the other person doesn’t, we think of it ourselves. Consequences.

Sincerity means not intending to do harm. Integrity means not doing it. Know the difference.

Substantive Law of Debt

If a debt collector can prove you borrowed money and didn’t pay it back, it should get a judgment against you. And if you don’t make them prove their case, they will get their judgment. Simple as that. They call that “strict liability,” which means that WHY you didn’t pay does not matter.

On the other hand, there are events that can destroy a debt. Showing payment, that it was based on fraud, or settlement to name a few, will attack the debt. But if the debt isn’t destroyed, no amount of sincerity will get you off the hook. It doesn’t matter how much you wanted to pay. It doesn’t matter how much you tried to pay. Or whether you tried at all.

It’s surprising how often people get mad at debt collectors for trying to collect debts they (the people involved) can’t afford to pay. Just because the debt collector has a ton of money doesn’t mean they won’t or shouldn’t get a judgment against you. Don’t think that way.

Instead, fight and make them prove their case if they can. Require them to prove the debt and their right to it. Luckily, they aren’t so good at that.

Excuses in Litigation

We’ve been talking about the substantive law of debt, which is almost absolute,. It’s a little murkier when you talk about procedures such as responding to motions and the like. There, excuses CAN make a difference – sometimes. If you make a mistake in doing something, this can sometimes be excused. Likewise, if you make a mistake, you should certainly try to get it excused. The sincerity of your excuse will matter then, so make it good and say it with feeling. And you might get away with it.

But even if you do get away with it, every mistake has consequences. As a pro se defendant, you work mighty hard to get the judge to take you and your words seriously. You want the judge to apply the law fairly and consistently – that’s really all you need in most debt cases to win.

Follow the Rules – Don’t Ask for Breaks

Any time you ask the judge for something special or make some kind of excuse, you will hurt your chances of the court taking you seriously and holding the debt collector to the rules. And all too often, the court will not give you the break it probably should. Thus you should always work your hardest and do your very best to understand the law and rules of your court. As much as possible, you NEVER want to ask the judge for anything she isn’t supposed to do.

And to get your best, you must give your best. Never make excuses for yourself, and never accept them from yourself. It’s impossible to be perfect, but try not to make any mistakes you don’t have to make. That isn’t a cliche or boring old saying – it’s encouragement to you to work your @ss off. The only way to avoid making mistakes is by figuring out things ahead of time and always going the extra mile. You can get away with doing less in some parts of your life, but you often cannot in litigation.

 

 Get Help

If you would like us to take a look at your case and give you a sort of road map to what you need to do and how, take a look at our Personalized Evaluation product. If a debt collector is suing you and you already know you want to defend yourself without spending a lot of money on lawyers, then get our Debt Defense System.

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 has filed suit yet, 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

Pro Se Debt Defense – Easier than you Might Think

Pro Se Representation is easier than you think
Pro Se Representation is easier than you think

Should You Represent Yourself in Debt Law?


Hiring a lawyer might be the “gold standard” of defense, but lawyers are expensive. If you’re being sued by a debt collector and can’t afford a lawyer, all is not lost. You CAN represent yourself. This is not complicated law, debt collectors are not innovative or particularly energetic. And the debt collection system is a “factory” approach not designed to work against people who defend themselves intelligently. You can do it.

Okay – maybe debt defense isn’t always very fun. In fact, most of the time it isn’t exactly fun, but it is easier than you expect, And winning is great. Going from worrying about having to pay from $1,000 to $50,000 to some debt collector, to having them drop the case – or to settling with you for pennies on the dollar IS fun. It changes the way you look at debt and debt law forever.

Pro se legal means representing yourself rather than hiring a lawyer to do it for you. You have the right to do that in essentially any court proceeding, whether as defendant or plaintiff.

Pro se is a Latin phrase meaning “for oneself.” You will sometimes see it called propria persona (abbreviated to “pro per”). In England and Wales, the comparable status is called “litigant in person.” Not that it matters, right?

Some Think It’s Scary

Although many people fear the thought of representing themselves in court, pro se representation is not rare. According to National Center on State Courts in 1991-92 71% of domestic relations (family law) cases had at least one unrepresented party. In 18% of the cases both parties were pro se.  It is a growing trend in debt collection law as well .

People have long had the right to self-representation in the United States. That right predates even the ratification of the Constitution. Section 35 of the Judiciary Act of 1789—enacted by the first Congress and signed by President Washington, states that, “in all the courts of the United States, the parties may plead and manage their own causes personally or by the assistance of counsel.” Most states have a similar constitutional provision.

Will the Courts Protect You from Mistakes?

The California rules of Civil Procedure explicitly prefer resolving every case on the merits. This applies even if doing it requires excusing a mistake by a pro se litigant that would otherwise result in a dismissal. The Judicial Council says that “Judges are charged with ascertaining the truth, not just playing referee.” And the Council suggests “the court should take whatever measures may be reasonable and necessary to insure a fair trial.”

Most states and the federal courts officially share this bias in favor of hearing courts on “their merits,” (based on what is actually fair). Pro se litigants cannot rely on any special treatment, however. Some courts explicitly will not extend favorable treatment to non-professional litigants. Our position has always been that you should know the rules. Knowing the rules means you can use them. And one secret of debt law is that it is the debt collectors who rely on leniency. You need to prevent that if possible.

Pro Se Litigants Often Do Very Well

Pro se litigants usually do not need extra help. According to Erica J. Hashimoto, an assistant professor at the Georgia School of Law, criminal defendants are “not necessarily ill-served” by the decision to represent themselves. In state court, pro se defendants charged with felonies probably fared much better than represented defendants.

Of the 234 pro se defendants studied by Ms. Hashimoto, “just under 50 percent of them were convicted on any charge….for represented state court defendants, by contrast, a total of 75 percent were convicted of some charge.” And just 26 percent of the pro se defendants ended up with felony convictions, whereas 63 percent of represented defendants in Ms. Hashimoto’s study did. In federal court…the acquittal rate for pro se defendants is virtually identical to the acquittal rate for represented defendants.

Of course there could well be other important variables that the Hashimoto study did not include, but it seems clear that there is not an “automatic penalty” for daring to represent yourself.

There are certain types of cases and situations where pro se representation may actually be an advantage. In debt collection cases, for example, the economic factors often outweigh legal issues. A vigorous pro se defendant can gain a significant advantage by taking energetic steps that a lawyer—always on the clock—would pragmatically be unable to take.

Courts are not always favorable to self-represented people for various reasons. But even with that bias, pro se plaintiffs have recorded some significant victories in civil courts.

Pro Se Representation in Debt Collection Cases

Defendants in debt collection cases have some significant economic advantages in conducting their cases. They also have fewer of the disadvantages that many other types of cases have. Debt collection cases tend to be document-intensive rather than witness-intensive. In the unusual case which actually goes to trial, there are not many things to prove or disprove, and the evidentiary issues are basic. Pro se defendants can argue whether the debt collector produces enough evidence. And whether that evidence is “admissible” in court for the court’s consideration. You won’t need much finesse.

This basic legal simplicity, and the fact that debt collectors drag defendants before the court against their wishes often seem to create a favorable impression on the judges.

Get Help

If you would like us to take a look at your case and give you a sort of road map to what you need to do and how, take a look at our Personalized Evaluation product. If you’re in a lawsuit and already know you want to defend yourself without spending a lot of money on lawyers, then get out Debt Defense System.

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 the debt collector has not filed suit, 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

 

Foreclosure: A Debt Collection Method in Ordinary Life

Foreclosure is a form of collection
Foreclosure is collection

Foreclosure is Debt Collection

Foreclosure is a form of debt collection in the real world. Debt Collectors threaten to repossess and auction off property that secures a loan unless that loan is paid, or else they actually repossess and sell off the property, in order to pay the debt. This video and article discuss the way the process works.

What Foreclosure Does

Foreclosure is designed to allow for possession (or repossession) of property that was used to secure a debt that was subsequently unpaid. Most people simply think of foreclosure as “getting kicked out of your house,” and in many situations that is an appropriate understanding. In reality foreclosure addresses ownership rights rather than possession, however. It involves the termination of at least one person’s rights of ownership in favor of another person, and this can, but does not always, lead to eviction.

English Law and the History of Foreclosure and Property Rights

We don’t think of it very often, but one of the great inventions of English law was the division of property into different property “interests” or rights that could co-exist in the same property. The state “owns” physical property in one way, the landowner in another, and the tenant also has certain ownership rights, for example. If the landowner is married, both spouses will have rights in the property, and it is possible to divide the rights up in many other ways, too. Another form of coexisting rights is the way the same property could be owned by you, but subject to a mortgage and also various sorts of liens.

“Foreclosable” Interests

It is with the mortgage and liens we are primarily interested here, because these can be “foreclosed.” It is worth remembering that while most people (including the courts) only think of “purchase-money mortgages” (the mortgage you take out in order to buy your house) when they analyze foreclosure, there are other ways liens can be placed on your house (by the state for taxes or judgments, to name two), and all liens can be foreclosed. Mechanically what happens is that the foreclosing party causes the property interests to be divided and paid off – and the way that is accomplished is by selling the property and splitting the money up according to the priority of interests.

There is a definite hierarchy of interests, and the higher interests must be completely satisfied before the lower interests get anything. Eventually, if every interest is satisfied and money is left over, this would go to the property “owner.” Or to put it another way, being the property owner means that you get whatever is left after all the other interests are paid off (you are entitled to the “equity”). But usually, if there is not enough to cover all the secured interests, you will owe the secured parties money personally.

Two Examples of Foreclosure

Let’s consider two examples. In the first, Owner A each own houses worth $100,000 on the open market. That’s what it sells for.

Owner A

Owner A has the following liens against the property: a purchase money mortgage of $35,000, a home equity loan of $10,000, and a mechanic’s lien of $1,000.

$100,000 Value of House

($35,000) Purchase Money Mortgage
($10,000) Home Equity Loan
($ 1,000) Mechanic’s Lien
===================

$54,000 – Equity

Owner B

Owner B has the following liens against the property (in this order – the order of liens is beyond the scope of this article): a purchase-money mortgage of $110,000 (the house is “underwater” because the loan remaining is more than the house is worth); a home-equity loan of $10,000, and a mechanic’s lien of $1,000.

$100,000 Value of House

($110,000) Purchase Money Mortgage
($ 10,000) Home Equity
($ 1,000) Mechanics lien
=============

($21,000) equity (a negative number)

If neither one can pay off the purchase money mortgage, go into default, and are foreclosed, here’s what happens.

Results of Foreclosure

A loses possession of the house, and all security interests in the property are “extinguished.” The money is enough for the mortgage, and that is subtracted and given to the bank. Because the home equity loan and mechanic’s liens was “secured” by the house, the foreclosure breaches the contract with the lender. It intervenes (legally) in the foreclosure and demands its money and gets paid before anything goes to A. Because the lien was “subject” to the other agreements, it gets paid afterward, again before A gets anything.

In B’s situation, the bank gets all the money, and the lenders are left with claims against B. Their security interests in the property are extinguished, and chances are good they’ll lose everything they had lent.

Why Debt Collectors Often Do Not Foreclose

What if, instead of not paying the bank, A and B had failed to pay the home equity loan? In that situation, the Home Equity lender could foreclose on the loan. Lower level security interests can foreclose on the loan. It would be conceivable that any other person with an interest in the property, including the mechanic, might take some action to intervene in order to protect its interests, although in B’s case, especially, this is unlikely. The bank will get all the money, and the home equity lender will get nothing even though it is the one that foreclosed.

This explains why debt collectors rarely foreclose on a house. It will cost them money but get them nothing. But that isn’t to say they couldn’t or that it would never make sense for them to do or threaten to do.

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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Credit Reporting Act: Repairing Credit after Debt Litigation Part 2

Fair Credit Reporting Act

This is the second part of this article. You can get part 1 by clicking here

You may have heard of the Fair Credit Reporting Act, 15 U.S.C. Sec. 1681. This was a law initially designed to limit and reduce the abuses of the credit reporting agencies, which were running roughshod over consumer rights. In particular, the credit agencies would report false or disputed information which was damaging people in very real ways – and then ignore repeated requests to correct that information. The FCRA was an attempt to assert some kind of control over them. I will address this issue more fully some other time, but the law divides the reporting community into two groups: the agencies and “information suppliers.”

Debt Collectors Are Often Information Suppliers

The people who report debts to the credit reporting agencies are “information suppliers,” and while they have a legal duty to report that information truthfully, that duty is initially enforceable only by certain government agencies. In plain English – you can’t sue them for reporting information falsely. And, naturally, that is exactly what’s happening when you are falsely trashed in your report. But you do have a right.

Your Right against Information Suppliers

Your right against information suppliers is located in 15 U.S.C. Sec. 1681s-2(b). What this part of the law says is that:

1. In general

After receiving notice pursuant to section 1681i(a)(2) of this title of a dispute with regard to the completeness or accuracy of any information provided by a person to a consumer reporting agency, the person shall –

(A) conduct an investigation with respect to the disputed information;’

(B) review all relevant information provided by the consumer reporting agency pursuant to section 1681i(a)(2) of this title;

(C) report the results of the investigation to the consumer reporting agency; and

(D) If the investigation finds that the information is incomplete or inaccurate, report those results to all other consumer reporting agencies to which the person furnished the information and that compile and maintain files on consumers on a nationwide basis.

Your Rights under the FCRA

What this means in a practical sense is that if you win at trial and get the debt collector’s case dismissed, or if you force it to settle where its claims are dropped “with prejudice,” then you should consider following up with a request to the reporting agencies for your credit report. If the debt collector has reported you as owing, or if the original creditor has not reported the debt as sold, then you may want to file a dispute. It is the filing of the dispute that allows you to sue the information supplier for providing false information to the credit reporting agencies.

How it Works

Suppose you go through the litigation process and get the case dismissed with prejudice. Your next move might be to request a credit report from all the credit reporting agencies. Debt collectors do not necessarily provide information to all the agencies, and perhaps they provide different information to different agencies. In any event, get your report from each of them. Please check out this month’s scam report before you do this, however.

When you get the reports, you must read them carefully – do they reflect that the debt was sold? Has the debt collector filed reports saying that you still owe? If the answer to either or both of these questions is “yes,” then you can write to the credit reporting agency requesting that it reinvestigate and stating very specifically that you “dispute” the report and the debt. Don’t be coy about this – you get no points for style here – you need to dispute the report and insist on a correction.

This dispute is what triggers the responsibility of the credit reporting agency to conduct a reasonable “reinvestigation.” As part of this reinvestigation, the agency must ask the information supplier to investigate the information it is supplying. If the information supplier provides false information at this point, you can sue it under the Fair Credit Reporting Act as well as under “common law” (state law) theories like defamation. And this is where collateral estoppel comes back into play – because if they claim you owe the money even though they have dismissed the case with prejudice, they would be “estopped” from arguing that they were telling the truth if you sued them for defamation or false reports under the FCRA.

Sue the Credit Reporting Agencies?

I’ve never suggested that nonlawyers try to sue the credit reporting agencies. They’re hard to find and serve, hard to figure out and, at least at the last report I got, they almost never give up. If you decide to go after the credit reporting agencies, you should very strongly consider hiring a lawyer.

Fair Credit Reporting Act: Your Rights under the FCRA

The Fair Credit Reporting Act establishes certain rules for the credit reporting agencies and outlines your rights against them if they fail. You’ve heard about having rights to a fair credit report. Here, in plain English, is a list and explanation of your most important rights under the Fair Credit Reporting Act (FCRA 0r sometimes, just CRA) in plain English.

The Importance of Credit Reports

Our country runs on credit and credit information and the credit reporting behind them. Of course there are the obvious uses of credit to purchase things, but as more and more people are finding out, credit reports are used for much more than that – they often impact employment decisions, housing decisions and rates, business equipment lease rates, and insurance availability and price, among other things. Bad credit has a high price in so many ways.

Credit Reporting Network

As important as all the interests affected by it are, the credit reporting network (the businesses which create and publish your credit information) is a vast and largely faceless bureaucracy. The federal Fair Credit Reporting Act (FCRA) was designed to create some accountability in this network and protect consumers from some of its abuses. The FCRA was designed to safeguard the accuracy, fairness and privacy of information in the files of consumers held by the reporting agencies.

Different Kinds of Credit Reporting Agencies

There are many different kinds of consumer reporting agencies – almost everybody knows about the credit bureaus, of course, and there are also specialty agencies that sell information about check writing histories, medical records and rental history records. The FCRA was directed primarily at these agencies, rather than the creditors or companies with which you normally do business.

Here is a partial list of your major rights under the FCRA.

This isn’t a complete, exact replication of your rights under the Fair Credit Reporting Act. As with most important laws, the exact rights and their limits change as courts interpret the laws. But this will give you an accurate overview – a place to start.

Access to Your Credit Report Limited

A consumer reporting agency may provide information about you only to people with a valid need – considering an application with a creditor, insurer, employer, landlord, or other business. The FCRA specifies those with a valid need for the information. And in most cases you must give your consent before the information is obtained or used.

Rights When Credit Information Used Against You

Anyone who uses a credit report or another type of consumer report to deny an application for credit, insurance, or employment – or to take other adverse actions against you – must tell you, and must give you the name, address and phone number of the agency that provided the information. You are entitled to a free copy of that report.

Right to Find out What Is in Your File.

You can find out all the information about you in the files of a consumer reporting agency. You must be offered a free disclosure if:

  • A person has taken adverse action against you because of information in your credit report;
  • You place a fraud alert in your file as a victim of identity theft;
  • Your file contains inaccurate information as a result of fraud;
  • certain other reasons.

All consumers will be entitled to one free disclosure every 12 months upon request from each nationwide credit bureau and from nationwide specialty consumer reporting agencies.

Right to Dispute and Correct Information

If you identify information in your file that is incomplete or inaccurate and report it to the consumer reporting agency, the agency must conduct a “reasonable” investigation, and it must report the information as disputed. If it is unable to verify the information after investigation, the agency must remove or correct the entry.

For practical reasons, this provision may actually provide more important rights against the businesses that report credit events (the debt collector reporting a debt as unpaid, for example) than against the reporting bureaus.

Time Limits for negative information.

In most cases, a consumer reporting agency may not report negative information that is more than seven years old, or bankruptcies that are more than 10 years old.

Next Step to Take

Sign up for your free copy of the Fair Credit Reporting Act on this page.

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 was 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.

Doyoutrust

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 present. You may be able to sue them or prevent them from suing you.

The Debt Collection Industry

Before the act, the debt collection industry was routinely engaging in the most abusive sorts of behavior imaginable, from calling debtors at all hours of the day or night and subjecting them to streams of cursing and name-calling, to discussing their debt with children, neighbors, and employers. Debt collectors frequently misrepresented themselves as attorneys and often 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. Because the people intended to be protected by the act are underrepresented by lawyers, and because of the explosion of debt litigation over the past decade, many of the old abuses still continue, and as people increasingly defend themselves from the debt collectors, they develop new tricks all the time.

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.