Tag Archives: fair debt

Requiring Verification of the Debt – Secret Weapon against Debt Collectors

Verification is not difficult for debt collectors, but it can be a key right for people with debt problems.

When a debt collector first contacts you, it should notify you of your right to “dispute and request verification.” That right is provided by the Fair Debt Collection Practices Act (FDCPA). This video explains why you should dispute the debt and require the debt collector to verify it.

In other words, always seek verification  Often a debt collector will either disappear completely once you seek verification or will fail to provide verification but still harass you – a violation of the FDCPA.

But remember this does not apply if they file suit against you – if you don’t answer a lawsuit when it is filed, you will lose the case. See Bogus Right to Verification on Petition – Dirty Trick! If you have already sought verification but not received it, you might file a motion to dismiss based on their failure to verify.

Your Right to Dispute a Debt

If a debt collector contacts you in an attempt to collect a debt, you have a right to dispute the debt. To be precise, you should receive written notice of that right within five days of the first communication. And the notice should tell you that you have a right to demand verification within thirty days. That is, you must make your request to them within thirty days.

If you do, they must verify the debt before taking any further actions to collect it from you. They don’t have to do anything within thirty days – they never have to verify the debt if they don’t want to . It’s just that until they do so, it’s illegal to try to get you to pay it.

If you have disputed the debt.

What IS Verification?

What constitutes verification is a gray area in the law. The FDCPA does not specify what it is.  The courts have taken a pretty non-demanding view of verification. It is intended mostly to prevent clerical-type errors leading to suing or harassing the wrong person. So in reality it takes very little to verify the debt. Debt collectors often offer nothing more than copies of old statements. Absent some sort of more specific challenge to the debt, that seems to be enough.

What could be a more specific challenge? Suppose you wrote and disputed a debt to you, Tom Jones. You say, “my middle name is Jim, and I never sigh without including my middle name.” In that case, sending you statements with the name “Tom Jones” on them might not be enough. They probably would not be. Likewise, a challenge to address or some other specific would probably need to be addressed by the verification. Does that make sense?

What Good Does Demanding Verification Do?

There are three good reasons to demand verification. Sometimes they go away. Sometimes they give you helpful information. And sometimes they ignore the law.

Sometimes they Go Away

Surprisingly, giving how easy it is to verify a debt, demanding verification often causes debt collectors to go away.  Perhaps it is only because you have signaled a willingness to assert your rights. Possibly in some transactions the debt collector lacks even this much evidence. Or more likely the debt collector is playing a simple numbers game and any friction whatever causes it to punt. For whatever reason, though, it seems to happen often enough to justify making the demand every time.

Sometimes they Give you Helpful Information

Rarely, a debt collector will simply give you everything it has in response to a verification demand. This allows you to think carefully about whether they could prove the debt. Usually you will see that they cannot. In any event, in some cases you can get what they have without a fight, whereas when you seek discovery in a lawsuit you will have to fight for everything. So it can be easy discovery.

Sometimes they Ignore the Law

Debt collectors used to ignore verification demands quite often. It seems that they don’t do that as much anymore, but this could simply be my limited observation. In any event, if they ignore the law and continue to harass you, you have the right to sue them under the FDCPA.

If they are suing you, you have a right to counterclaim against them under the FDCPA. This is the same right you have to sue them, only it happens differently because they have sued you first.

You probably have a right to move to dismiss the case as well. The point of verification is to prevent wasteful and harmful lawsuits. If they ignore the law and bring suit without verifying, a court should be willing to dismiss the suit until they obey the law.

Conclusion

If a debt collector is bugging you, you should demand verification. It costs little effort and might gain you something.

 

What to Do if a Debt Collector is Suing You

 If a debt collector is suing you, you may be intimidated or even panicked. You may be thinking about giving up, but that usually isn’t a good idea. You have an excellent chance to win if you will just fight a little bit. Defending yourself  isn’t that hard.

If They Have Already Filed Suit

If you are already in a lawsuit, you need action now. You should be doing things to protect yourself NOW. Our debt defense system gives people what they need to defend themselves.

You can beat them. It’s mostly a question of knowing what you need to do and doing that thing throughout the lawsuit. At the same time, not doing the things you should not do is equally important. It sounds simple, and it is – if you know what you’re doing.  You can know those things with the Debt Defense System and get help doing the right things while avoiding the wrong ones.

You have probably heard of the saying, “inch by inch it’s a cinch.”

Defending a lawsuit is never actually a cinch. However, debt defense just requires a series of decisions and steps. These are steps that anybody with some determination can take. You can do them well enough to do a good job  overall of defending. And that is usually good enough to win.

I have had a great deal of experience both as a litigator and web master. Over the years, I’ve realized that almost everyone representing himself or herself in a debt case does much better with an opportunity to talk to other people facing the same issues.  People can help each other with insights and information. Seeing a variety of samples is helpful as well.  The Debt Defense System, gets you a membership which gets you the full resources of Your Legal Leg Up’s website and  our weekly teleconferences.

 

What if I Really (Think) I Owe the Money?

What If I Really Do Owe the Money?

Or Think I Do?

Think you owe

What if a debt collector sues you for a debt and think you really owe the money? Should you defend yourself from the suit?

Debt collectors often sue the wrong people and usually overcharge. If you don’t defend, you run the risk of having to pay twice. And if you do defend yourself, you probably won’t have to pay at all. If that bothers you, give the money to somebody who really needs it.

Most People Debt Collectors Sue May Actually Owe Someone Some Money

 

If a debt collector is suing you, you probably think you owe them the money. Or think you owe someone the money, although it’s surprising how often people who do NOT owe anybody any money get sued. If that’s you – you still need to fight the case, it won’t go away by itself. But if you actually do owe somebody the money for which you are being sued, you still need to be careful.

And you should still defend yourself as well as you can.

You must make the debt collector prove every part of its case. This includes not only that you owe the money, but that you owe it to them. And exactly how much you supposedly owe. That’s because old debts get sold – often more than once – and if you don’t make the debt collector prove it owns the debt, you may pay the wrong person. And then you might have to pay again if the person that actually owns the debt sues you.

In addition, most people do not owe what the debt collectors are trying to collect. They routinely add fees and interest they should not, and consumer protections agencies and organizations say that almost all debt collection suits include extra charges. Many of them are for far more than is owed.

The Good News

The good news about debt collectors is that they usually CANNOT prove their cases if you make put them to the test. The whole process by which they get these debts is so sloppy and careless that they usually cannot find or obtain the proof that they need to win their case. IF you defend yourself.

Get Help

If you would like us to take a look at your case and give you a sort of roadmap 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 know you want to defend yourself without spending a lot of money on lawyers, then get out Debt Defense System.

Protect Your Rights

If debt collectors are harassing you, you need to be alert to protect your rights. These calls are often a prelude to their suing you. You might consider membership with our site, which gets you our ecourses for free, plus gives you many other benefits.Check out some of our e-courses. Or consider our prepaid legal plan to protect you from future possible litigation. With that, if they do sue you, you’ll get a lawyer to defend you for free.

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Who is a Debt Collector after Santander Case

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

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

Fair Debt Collection Practices Act

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

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

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

Real-Life Debt Collection

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

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

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

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

How the FDCPA Defines “Debt Collector”

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

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

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

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

Supreme Court is AGAINST Debt Defendants

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

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

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

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

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

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

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

Use of “Regularly Collects” Debts Language

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

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

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

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

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

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

What Debt Defendants Should Do

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

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

Verification of Debt – Don’t Let the Right Turn You into a Sucker

Don’t be a Verification Sucker – Request for Verification is NOT a Substitute for an Answer

 

Debt verification (also called “validation”) of your debt is an important right. If the debt collector brings suit, though, it’s too late. Demanding validation will NOT prevent a default judgment if you try it after the debt collector brings suit. In fact, a lawsuit does NOT trigger the right to verification at all.

People in debt trouble hear a lot about debt validation, and it can be a valuable right. Even though it requires little from the debt collector, making the demand seems to cause some debt collectors to go away. It will at least send a signal to the debt collector that you will defend your rights.

If the debt collector has filed suit, you must defend the lawsuit and file an answer (or appropriate motion) in court. If you don’t answer, the debt collector usually gets a default judgment. That effectively ends your rights to fight the debt.

That’s because, under the Fair Debt Collection Practices Act (FDCPA), filing suit is not an “initial contact” for purposes of verification. Validation is designed to keep debt collectors from suing the wrong people. After they file suit, it’s too late for that. Instead, the courts will decide.

Or so goes the legal precedent. The debt collectors know – and we all know – that most people do not protect themselves in court.

Make sure you do. You have to file an answer or the appropriate motion to do this.

Conclusion

When a debt collector (or creditor) files suit against you, you will have to file an answer in court to avoid a default judgment. Many people think all they have to do is “dispute the debt and request verification.” The right to verification, however, applies only to collection efforts that are not part of a lawsuit. Don’t be a verification sucker – file an Answer and defend yourself.

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.

 

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.

 

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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.

 

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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. Congress intended this law to limit and reduce the abuses of the credit reporting agencies, which were running roughshod over consumer rights. In particular, credit agencies would report false or disputed information. This damaged people in very real ways – and then the agencies ignored requests to correct that information.

The FCRA was therefore an attempt to assert some kind of control over the process of credit reporting.

I will address this issue in greater detail elsewhere, 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.” While they have a legal duty to report that information truthfully, only the government agencies can enforce that duty initially. In plain English – you can’t sue them just for reporting information falsely. You have to follow some steps.

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 you should consider following up a debt defense with credit repair. That is, if you win at trial or if you force the debt collector to dismiss “with prejudice,” then you can probably repair your credit, too.

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.

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 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.

If they claim you owe the money even though they have dismissed the case with prejudice, they would be “estopped” from arguing 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. It is hard to figure out who is responsible for what at the agencies. And they almost never give up. If you decide to go after the credit reporting agencies, therefore, 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.

The Importance of Credit Reports

Our country runs on credit and credit information and the credit reporting behind them. Obviously,  people use 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. They also affect 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. Congress intended the federal Fair Credit Reporting Act (FCRA) to create some accountability in this network. 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. 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. These include 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 they get the information.

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. They also must give you the name, address and phone number of the agency that provided the information. You have a right 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, you have rights. 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 than against the reporting bureaus. Debt collection firms have a hard time providing the required verification.

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.

Note that is in “most cases.” There are important exceptions to this rule. The exceptions relate to larger transactions. Where a person is seeking a job with a higher salary or insurance with a higher payment amount, the time limit may not apply.

Next Step to Take

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