What Debt Collectors Can’t Do…#2

Hey hey hey. I’ve got another good one for you to think about when you’ve got debt collectors calling you:

Debt collectors are prohibited from communicating with your place of employment if the debt collector has reason to know that your employer prohibits those kinds of communications.

This issue seems to flare up with some regularity, and like everything in the law, has a few caveats. Here’s the full legalese from the statute:

Communication with the consumer generally. Without the prior consent of the consumer given directly to the debt collector or the express permission of a court of competent jurisdiction, a debt collector may not communicate with a consumer in connection with the collection of any debt….(3) at the consumer’s place of employment if the debt collector knows or has reason to know that the consumer’s employer prohibits the consumer from receiving such communication.” 15 U.S.C. 1692c(a)(3)

Lauritzen Gardens resized

Here are the takeaways from the statute that you should keep in mind next time you get a phone call from a debt collector while you’re toiling away, working for the man:

  • A debt collector can call your employer all they want IF you give the debt collector permission to do so. This isn’t legal advice, this is just common sense – don’t do that.
  • Does your employer have a policy on personal phone calls in the workplace? Whether explicitly and painstakingly recorded in an employee handbook, or informally acknowledged in the office that personal calls on the company’s dime “is just not cool, man,” your employer probably doesn’t want to get calls from debt collectors any more than you want debt collectors to call your employer.
  • This provision was included because who really likes to have their dirty underwear aired in front of their work colleagues? I better not see any hands waving in the air.
  • The best way to make sure the debt collector understands that your employer does not allow debt collection phone calls is to verbally inform the debt collector on the phone, and write down the time, date, and who you talked to in order to keep a record.
  • And if your employer is OK with those kinds of harassing phone calls, you should probably polish up that resume and find a better employer.

What is a Default Judgment?

Have you ever heard of a default judgment? Have you ever had a default judgment entered against you?

The Nebraska Supreme Court rules define default judgments as “cases where the defendant fails to answer, demur, or otherwise plead,” and the plaintiff files a verified petition, affidavits, or sworn testimony on the day after the defendant’s answer was supposed to be filed. Rule 6-1432.

OK, so this is a Netflix envelope. The point is: don't ignore anything you get in the mail. Whether it's your next Netflix dvd or a notice that you're being sued.

OK, so this is a Netflix envelope. The point is: don’t ignore anything you get in the mail. Whether it’s your next Netflix dvd or a notice that you’re being sued.

Cutting through the legalese, here’s what this means:

You get a notice in the mail that you are being sued. Instead of doing something (ANYTHING!), you ignore the notice and hope it goes away. It doesn’t go away. 30 days pass from the day you were served with the lawsuit notice. 

On the 31st day of knowing you are being sued, the plaintiff files all the important paperwork with the court that they think will sufficiently prove their case against you, the defendant. 

There’s a default judgment hearing before the judge. Plaintiff assumes you won’t be there, since you didn’t answer the lawsuit complaint in the first place, and let’s face it, you probably won’t be there. So the judge and the plaintiff’s attorney and maybe even the plaintiff himself is there, at the hearing. You’re not there. No one hears your side of the story because you weren’t there to tell it and you didn’t think it was important to answer the lawsuit complaint in the first place. 

Having heard only one side – the plaintiff’s side of things – the judge will enter a default judgment against you. Not good, not good at all. Now the plaintiff can go about finding ways to get his default judgment paid – by garnishing your wages, garnishing your bank account, searching for pockets of money you might have to pay off the judgment, which is a higher amount than your original debt that went into collections. 

Unfortunately, this is why debt collectors have so much leverage over the average consumer – no one thinks it’s important to respond when they receive notice that they are being sued. Who cares if it’s only for that medical debt that you can’t pay anyway?? I care, because if you allow a default judgment to be entered against you, additional fees, interest, and costs will be tacked onto your original debt. Do you think you should be paying more money on the debt you already can’t pay?

Bottomline: please please please don’t ignore those lawsuit notices. Answer them, show up to your hearing dates, or do whatever you need to do to keep yourself in the game.

 

 

What Debt Collectors Can’t Do….#1

I’m starting a series, hopefully to help those of you receiving calls from debt collectors, or other types of communications from debt collectors (Ex: my post on The Worst Thing a Debt Collector can Do to You).

To start the series, let’s talk about one violation that seems to occur with alarming regularity:

Causing the phone to ring or engaging any person in telephone conversations repeatedly

This language is taken directly from the federal statute, 15 U.S.C. 1692(d)(5), outlining one of many forms of harassment a debt collector may not use in order to collect a debt. Here’s the full text of 1692(d)(5):

“Causing a telephone to ring or engaging any person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number.”

So how many telephone calls does it take to count as harassment? It depends.

Frustrating answer, isn’t it? There isn’t a bright line rule because courts analyze the statute under a case-by-case basis. This means the facts of one case don’t necessarily predict the outcome of another case that might have similar, but distinguishable facts.

Here are some factors to consider if a debt collector has been calling you:

  • How many calls have been made to your home or office or cell phone?
  • Over what length of time have those calls been made? Common sense would suggest that the more calls made over a short course of time, the more likely it is that you have a violation.
  • Are they leaving messages if you don’t pick up the call?
  • Are you picking up the call every time they call?
  • Are they calling after working hours?

Bottomline: if you feel as though a debt collector is harassing you with their constant phone calls, contact a FDCPA attorney to see what they think.

The Worst Thing a Debt Collector can do to You

Picture with me the following scenario:

You receive what looks like formal documents in the mail, or someone shows up at your doorstep to hand them to you, or you get a note in the mail saying you have certified mail to pick up at the post office. No matter how this piece of paper gets to you, it looks official and serious.

After scanning the document to make sure you’re not being arrested, you then realize that you are being sued. By a collection company. For a debt that you may or may not owe to a doctor, hospital, credit card company, or car dealership. Or some other entity that you supposedly owe money to.

What you do next with this document greatly depends on whether you understand what the WORST thing a debt collector can do to you. Here’s option 1 (the not-so-good choice):

  1. You ignore or forget (same thing) the piece of paper. Maybe hope it’s somehow not legitimate, or reason that you just don’t have time to deal with this right now. Or maybe you do owe the debt, so what’s the point of fighting something you already know you owe?

Option 2, below (the better choice):

2. You respond to the document by filing what’s called an “Answer.” Or you hire an attorney to do this for you. You show up in court when you’re supposed to, and you get all the information before settling or going to trial with the collection company.

You may be thinking to yourself: “But why go to all that trouble? That’s just attorney-speak for generating more business for themselves. Or, who has the time to do that? I’m working two jobs and trying to pay child support, there’s no time to deal with something I already know about.”

Don't just sit there! Do something!

Don’t just sit there! Do something!

Here’s where you are wrong. Option #1 allows the debt collector to do the WORST thing that they can do to anyone: ask for a default judgment from the court, and then move forward with enforcing their default judgment.

Default judgments generally provide the maximum amount the collection company is seeking, plus fees, interest, and costs of filing a lawsuit. Allowing a default judgment to happen to you just raises the amount of money you are going to have to pay. A default judgment also allows the collection company to garnish your wages, if you’re employed, or find alternative ways to suck money from you. Third, a default judgment becomes part of your public record, people can see it and draw their own conclusions about it.

Bottom line: the worst thing a debt collector can do to you is get a default judgment against you. Don’t ignore the paperwork they serve you with, and read the paragraph above to understand what makes default judgments the WORST.

John Oliver on Debt Buyers

John Oliver is killing it lately with his shows on debt and debt buyers. If you have 20 minutes, take the time to watch this video. If you don’t have 20 minutes, skip ahead to the middle of the video and watch at least the last 10 minutes, it’s worth it…

#1 Thing You Should Do When Your Bankruptcy is Over

Filing for, and completing, a bankruptcy is usually not at the top of most people’s lists for “number one fun thing to do.” It’s often the last resort, I’m-drowning-in-medical-bills, I-don’t-see-any-other-way-out option.
But if you have to do it, you do it. You wipe clean your financial slate with a bankruptcy. Any creditors claiming you owe them money have to get their claims in by certain deadlines, and you have a structured payment plan on how to get everyone paid back, or no repayment plan at all.
A bankruptcy is a one-shot opportunity to wipe the slate clean, so shouldn’t you make sure that slate is completely clean?
The number one thing you should do to make sure you are starting on a blank page after your bankruptcy is over is to check your credit reports a few months after the bankruptcy is done. You need to make sure there are no outstanding accounts on your credit report that were supposed to be erased by the bankruptcy.
After all, if you went to the hassle of filing for bankruptcy, shouldn’t you get the full benefit of a bankruptcy?

5 Examples of FDCPA Violations

The Fair Debt Collection Practices Act is a federal law that’s been on the books since 1977. Congress recognized that debt or bill collectors were using abusive, deceptive, and unfair debt collection practices that overwhelmingly hurt American consumers. As a way to balance the scales against the debt collectors, the FDCPA allows consumers to bring a federal lawsuit against bill/debt collectors for any violation of the FDCPA.

 

So what counts as a violation of the FDCPA? Here are five examples:

 

  1. Talking to anyone except you, or in limited circumstances, your spouse, about a debt they are trying to collect.
  2. Using profanity, yelling, name calling, or any other speech which is disrespectful or undignified.
  3. Threatening to notify your employer, your neighbors, or any third person about the debt they are trying to collect.
  4. Telling a consumer that a refusal to pay a debt could result in arrest or criminal charges being brought against them.
  5. A debt collector can not call you at your place of employment if you have told them that you are not allowed to take such calls at your work or to stop calling you at your place of work.

 

Any one of those examples I gave is enough to file a federal lawsuit against the debt collector and sue for statutory damages. And more importantly, if you filed a lawsuit, would be the first step in ending those harassing phone calls.
There are plenty of other examples that I can discuss in future posts. What seems to be more important is that people – consumers – get educated on these laws and their rights under the law.

What is the Consumer Financial Protection Bureau?

Consumer Financial Protection Bureau website.

 

A relatively new government beast, the Consumer Financial Protection Bureau (or CFPB, for short) was created in response to the 2008 financial shakedown of American consumers. It’s basically the arm of government meant to give some teeth to the federal consumer laws, like the Fair Credit Reporting Act and the Fair Debt Collection Practices Act.

 

If you look around its website, you’ll quickly see that it considers its powers to be threefold:

  1. “Empower”
  2. “Enforce”
  3. “Educate”

 

“Empower” and “Educate” kind of seem like the same thing to me – aren’t you empowered when you are educated? Or something like that? I guess as an attorney I should be able to appreciate the subtle nuanced differences they make between “empower” (create tools, answer questions, provide tips) and “educate” (encourage financial education, publish research, educate financial companies on their responsibilities), but it really all seems like it could belong in one big group.

 

So if you have questions about getting a mortgage, or are wondering what your rights are as a consumer under federal law, the CFPB website is the place to be.

 

The “enforcement” wing of CFPB’s powers is more exciting – the CFPB can bring actions against financial companies for violations against consumers. In briefly looking over the cases the CFPB lists on its website, the cases seem like class action cases. Where there are enough consumers harmed, there is enough initiative to yank the leash and harness the wrongdoing financial company. For instance, one class of victims was entitled to compensation out of a $14M pool of money from Amerisave Mortgage Corporation and Novo Appraisal Management Corp.

 

The weird part is that there’s only 17 cases listed for “payments to harmed consumers.” The CFPB touts that it was won back billions of dollars for consumers who have been mistreated in some way by financial companies, and it makes sense if they’re getting millions of dollars in one settlement. But how do they find their class of victims, and do the funds get appropriately distributed? How much of the CFPB’s budget is dedicated to enforcement, and how much is applied towards empowering/educating consumers?

 

Providing consumers the opportunity to file a complaint against a financial institution seems to be the main focus of CFPB for now. They have a huge 2015 report of all the complaints they’ve received, even breaking them down by type of complaint, such as mortgage complaints and credit card complaints.

 

So if you have questions about your mortgage, your credit card, student loans, payday loans, prepaid cards, financial services, money transfers, consumer loans, bank account and service, credit reporting, or debt collection, the CFPB should be one of the first places you look to see what your rights are. It is pretty exciting that there’s actually a government agency that handles consumer law from every angle instead of a piecemeal approach from several different agencies.
Now the question is: do consumers know about the CFPB, and is the CFPB, in its own words “Helping you live a smarter, healthier financial life”?

You Need to Read This

https://www.propublica.org/article/for-nebraskas-poor-get-sick-and-get-sued

 

For those of you Nebraskans who might have missed this article, published in the Lincoln Journal-Star, as well as ProPublica, The Atlantic, and The Daily Beast, you should read it. The author explores how rampant debt collection lawsuits have become in the state of Nebraska – particularly, the overwhelming amount of lawsuits filed by Credit Management Services.

 

In case you don’t feel like reading a whole other article (you’re busy, I get it), here are some take aways:

 

  • In 2013 Credit Management Services filed 30,000 lawsuits, which is more than all of the other Nebraska collection agencies combined. That amounts to filing approximately 120 lawsuits per business day.
  • “From 2008 to 2014, CMS seized at least $88 million from Nebraskans’ wages and bank accounts, according to court data analyzed by ProPublica.”
  • “In 2013, Cook County, Illinois, which contains Chicago and has a population of over 5 million, had about the same number of collection suits as Nebraska with its population of fewer than 2 million. That year, it cost $172 in Cook County to file suit for the sort of small amounts that predominate in Nebraska, where the fee was $45.”
  • Many of the debtors are low income (making $30,000 or less annually), and many of the debts being collected on are less than $700.

 

This article shows not only how collector-friendly Nebraska laws are (which begs the question, why isn’t someone in the state legislature taking this cause up already?), but also reinforces my belief that everyone should be educated on their consumer rights. And hopefully get educated before you get that call demanding payment for a past-due medical bill or over due credit card account.

 

Here’s the link to the article again, in case you missed it at the top:
https://www.propublica.org/article/for-nebraskas-poor-get-sick-and-get-sued

Credit Repair vs. Consumer Protection

I think it’s important to provide a friendly public service announcement to explain the difference between “credit repair” and “consumer protection.”

 

I do not provide credit repair services as an attorney. I assist people in correcting mistakes or incomplete information on their credit reports. The difference?

 

Credit repair is an industry in which someone who has something completely accurate on their credit report pays someone else to try to trick the credit bureaus or agencies into changing or deleting accurate information.

 

Here’s an example:

 

Joe takes out a car loan with a credit union. Joe falls on hard times and can’t make his car payments, and the credit union takes the car back. Accordingly, and unsurprisingly, his late or unpaid car payments show up as a blip on his credit report, as well as the repossession.

 

Joe gets his financial house in order, and wants to refinance his mortgage, but can’t because of the blip on his credit report. In order to “clean” his credit report, Joe finds a credit repair outfit who will send bogus letters to credit agencies questioning whether that blip is actually Joe’s, or some other maneuver to lead these agencies into removing the “questionable” account.

 

I would not represent Joe. His credit report was accurate, he just wanted it “cleaned.”

 

Here’s how Joe would become a client: if the car loan belonged to Joe Jr (Joe’s son), but the account ended up on Joe Sr’s credit report. That is an inaccurate entry on Joe Sr’s credit report and is a violation under the Fair Credit Reporting Act.
The other big difference between a credit repair agency and a consumer protection attorney? A consumer protection attorney will not charge you fees for a legitimate case.