Articles Posted in Debt Buyer Collection Lawsuits

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arkovich_law-narrowThis month, lots of debt collectors are filing cases.  You may have been served recently.  First, don’t ignore it.  If you ignore a summons, it’s easy for the debt collector to get a judgment and start to garnish your wages or bank accounts.  Don’t do it.  We call that “low hanging fruit”.  They like when you default.  It’s an automatic win for them.

There are many possible defenses.  Perhaps their paperwork is bad.  Perhaps they tried to collect too aggressively and violated our consumer laws.  Maybe they waited too long to sue and the statute of limitations ran.  Something.  Anything.

You can also settle.  A settlement before they win.  After they win, they no longer want to settle on terms that you may find attractive.

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When is it time to ignore calls versus doing something about them?

If you are being harassed or threatened collection actions on old debt, there are many things to consider.  First, a legitimate collector is required to send you something in writing within five days of the initial contact under the FDCPA.  That’s sort of a litmus test.  Receiving nothing in writing is a violation, but it’s also a sign of a debt scammer.

Second, check your credit report via annualcreditreport.com.  If the debt is on there, it’s causing you harm and you should do something about it.  Contact us or another consumer attorney — the first steps would be to dispute the debt.  Often the consumer rules aren’t being followed.  For instance, balances are reflected more than once, or are inaccurate in other ways.  We often file actions under the Fair Credit Reporting Act which may result in the debt being removed once and for all (waiver of debt or trade line deletion), and you may receive damages due to the inaccuracies.  Everything relies on good credit it seems.  Bad credit can harm you in all kinds of ways.  You don’t pay us up front – we only get paid if we are successful in obtaining a recovery.

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People are often confused about how attorney’s fees work – when do you have to pay your own, and when does the losing party have to pay?  This question is very important when you are faced with a decision of whether to “take someone to court”.  In the United States, each party pays their own attorney’s fees unless a contract or statute states otherwise.  Often a person is denied justice unless a contract or statute allows recovery of attorney’s fees because it simply does not make financial sense to right all wrongs.

Many consumer protection or debt harassment protection statutes such as the FCCPA, FDCPA, and the FCRA provides for the recovery of attorney’s fees.  Attorneys act essentially like mini attorney generals in that regard.  We can sue for someone under a statute that provides payment from an offending creditor for instance.

Contracts are another way in which attorney’s fees are recoverable.  You might read in a mortgage or debt related contract that the creditor is permitted to obtain its attorney’s fees and court costs if it has to pursue legal action to collect a debt.  While these contracts don’t clarify this, an attorney’s fee provision in a contract goes both ways, at least in Florida.  If the consumer is the prevailing party, the consumer can obtain their attorney’s fees and court costs as well.

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My first consult this week was for a former client who just learned of a bank garnishment of his joint bank account with his wife from an old Cach final judgment that he thought was vacated and dismissed.  The entire account was frozen.  Plus his wife’s next check couldn’t be stopped from being deposited and taken.

How did he learn of this?  When he was at the grocery store to buy food for his family in the midst of the COVID-19 crisis.  After carefully avoiding everyone and loading his cart with what he could find – he walked away with nothing.  He didn’t have money to pay us, but since we had been compassionate to him in the past, he thought, why not contact us, perhaps there is something we could do.

Fortunately, we were able to secure with the opposing attorney, a dissolution of the writ of garnishment and all the money in his joint bank account will be released in just a day or two.  In the meantime, our client has borrowed some funds from a neighbor.  This could happen to anyone — this client had no idea that this old judgment was out there, and that bank account was his emergency fund.  He lost his job in Europe and had no credit cards.  His wife works at a local Tampa Bay retailer and just had her hours cut.  I sincerely appreciate opposing counsel who timely communicated with me in this urgent matter to get it resolved now and without the necessity of a court hearing, which could take a few weeks!

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Are you looking down the barrel of an arbitration clause in your consumer/creditor agreement?  I’ve posted before (Arbitration Clauses in Consumer Contracts – How to Avoid Being Thrown out of Court) on some local case law here in Florida to help avoid arbitration clauses – but here’s a new case in the consumer’s favor in Bankruptcy Court for the Middle District of Florida.

The Bankruptcy Court ruled that an arbitration clause did not constrain the court’s contempt powers, “[w]ords in a consumer agreement cannot deprive the bankruptcy court of the inherent power to enforce compliance with an injunction.”  Verizon Wireless Personal Communications, LP v. Bateman, No. 14-5369, Adv. Pro. No. 18-1394 (M.D. Fla. Sept. 24, 2019).

So if you’re in bankruptcy, or had a previously filed one that you can reopen (without a filing fee), challenge the arbitration clause in bankruptcy – you may be much more likely to win!

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breaking bad
Useful information can be obtained from the Consent Orders relating to improper debt collection activities obtained by the Consumer Financial Protection Bureau.  Recent orders applicable to Fred Hanna, Encore Capital Group, Inc., Midland Funding, LLC, Midland Credit Management, Inc., Asset Acceptance Capital Corp., PRA, LLC, Porfolio Recovery Associates, Chase Bankcard Services, Santander Bank, N.A., Solomon & Solomon P.C., Westlake and Wilshire etc. can be found here on the CFPB site. (searchable filters).

Debt collectors are not permitted to provide false or deceptive information to you in their attempts to collect a debt.  This may include the things they can do to you if you do not pay (such as take your home, sue you etc.).  This may include who they are affiliated with.  We are evaluating a case right now where the debt collector is private company.  But they’ve told my client that they are the Department of Education.  This is contrary to their website which we noted states no affiliation with the DOE.  Basically, our marching orders are if what they say is not the whole truth and nothing but the truth, they run the risk of violating the law.  This means if they try to explain your options, but leave perhaps the best one out – this would be a violation of the FDCPA, FCCPA and perhaps even unlicensed practice of law.  All these consumer law violations give us excellent leverage to negotiate lower balances, better payment plans and sometimes even a write off of the entire debt.

This applies to all consumer debt.  Auto finance, second mortgages, credit cards, signature loans and best of all student loan debt.  When we are hired to settle any kind of debt we first take the time to educate our client on their consumer rights, what kinds of behavior can lead to violations and we have them document any phone calls they are receiving.  Then we use all this to settle the debt.

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expiredIf a creditor waits too long to sue, the creditor can be barred from ever bringing suit.  The purpose of having a statute of limitations is so that lawsuits are brought when the matter is still fresh:  before documents are destroyed and memories fade.  If they can no longer bring a lawsuit, then there is no way to legally enforce the debt.  Each state has their own laws as to how long the statute of limitations is and it varies tremendously by state and also by the type of action.  In Florida, the statute lasts five years for a written contract and four years for a credit card account.  While this seems simple, it is often amazingly difficult for a lay person to analyze because a contract may provide that a different state law applies, even a state that neither party has anything to do with.  The answer may also vary depending upon whether it is a procedural or substantive question of law or how complete the writing was.  The Florida Statute of Limitations on this is contained in Section 95.11:

Actions other than for recovery of real property shall be commenced as follows:

(2) Within five years.–

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debt erased
How many consumers are sued every day by a debt buyer they’ve never heard from in the past?  This is extremely common and presents an excellent defense for those knowledgeable enough to use it.

One of the best tools we have as a consumer lawyer fighting collection actions brought by companies such as Cach, Asset Acceptance, Sherman Financial Group etc. is Florida Statute Section 559.715.  It requires notification of any assignment of the right to bill and collect the debt be given to the consumer prior to filing a lawsuit in an attempt to collect the debt.  It acts as a condition precedent to filing suit and requires a case to be dismissed if properly asserted.

A case we had last week is a perfect example.  Our client was sued by Cach LLC for an old credit card debt and she represented herself for two years.  Not much was done other than an answer was filed.  However, the debt buyer recently started working on the file again and a motion for summary judgment was filed.  Our client hired us in February of this year to fight that MFSJ.  Once we reviewed the file, we determined that we could file our own Motion for Summary Judgment for failure of the debt buyer to send the notice required by Florida Statute Section 559.715.  We did and we won.   Case dismissed.  The Plaintiff’s Motion for Summary Judgment hearing already set a couple weeks later was removed from the calendar as the case was now over.  The statute of limitations was still open for the debt buyer to re-file for a few more months.  So we next offered to waive our entitlement to attorney’s fees in exchange for the debt buyer releasing their claims against my client.  They agreed.  Problem solved.  No low hanging fruit here Cach decided and they moved on.

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student loan bubble.jpgEarlier this year, total student loan debt surpassed credit card debt for the first time ever. Student loan debt and the resulting high tuition are without a doubt in a huge bubble after having raised 800 percent in the past few years. After graduation, students are presented with the bill and most have no idea how it got that high.

Why is this? The cause of this student loan bubble is not unlike the mortgage crisis. The initial theory was to expand homeownership to the masses. Thereafter, lax lending standards allowed more and more people to buy homes. More buyers led to higher prices. The mortgage loans were securitized on Wall Street to unidentified investors. As the demand for these investments grew, the need for more questionable loans grew. People began to fear being left behind, if they didn’t buy now, they would be priced out of a home forever. It was actually cheaper to buy a home than it was to rent one with first month, last month and security deposit required in cash. Who cared if the loan couldn’t later be repaid when it was determined that the homeowner didn’t actually have a job that paid $200,000, but instead worked as a gardener for $20,000. Turns out that kind of thing really matters now that our housing market tanked 50% or more across the board as a direct result of this chain of events. Poorly run mortgage servicers or those with their own agenda has multiplied the number of foreclosures. The resulting crash hurt everyone, even people who could normally afford their home payments but god forbid lost their job or had to move.

Feeding the securitization beast was a common problem among mortgage brokers and investment banks. They had to create product to sell to the securitization machine. Kinda like making meth in large quantities in the popular show Breaking Bad that I am now hooked on and spent half of this past Labor Day weekend watching.

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