What Debt Collectors Can’t Do…#4

This time, in our monthly series, we’re talking about false or misleading representations debt collectors may make to consumers.

Of the many prohibitions in this section, let’s zoom in on one particular no-no:

Representing or implying that nonpayment of any debt will result in the arrest or imprisonment of any person or the seizure, garnishment, attachment, or sale of any property or wages of any person unless such action is lawful and the debt collector or creditor intends to take such action.

Bottomline: debt collectors can not call you up, tell you that you owe X amount of money, and then inform you that you will be arrested if you don’t pay that money by the end of the day. Or that you’ll be thrown into jail if you don’t pay the debt.

That’s not how debt collection, or the legal process in general, works.

But it is scary, to listen to someone you don’t know, who you assume probably knows more about this area than you do, threaten you with legal actions that seem out of your control.

Here’s a tip: people who are thrown into jail have received some sort of judicial notice – whether by court order or bench warrant – that they are facing jail time. The only other way I can think of is if you violate a criminal law, like assaulting someone or disturbing the peace or distributing drugs, you can expect that if you get caught, you’ll likely be spending a night or two in jail before getting to see the judge to discuss a bond.

My point is that jail happens to those who commit criminal acts and are considered a threat to themselves or the community, NOT to people who have a debt being collected on. There is no authority for a private individual or entity to have someone locked up in jail. That only happens after a judge or jury has weighed the evidence, or law enforcement recognizes that there’s an imminent threat of harm, or the criminal act already occurred and the damage is done.

So if you get that call from the debt collector, and they threaten jail time or arrest if you don’t pay your debt, make a record of it and let them know they’ve violated the Fair Debt Collection Practices Act.

Beware the Scam of the Month

Sometimes I have a hard time telling the difference between a good deal and just some marketing ploy intended to get me to buy more, more, more. It happens a lot in the grocery store, and it drives me crazy when I find out I fell for the sucker deal instead of the legitimately good deal.

For instance, I love buying a whole pineapple. I have found that pineapple prices can vary widely, depending on where you shop. At my local grocery store, they had a sign advertising their pineapple prices in bright yellow and red colors, as if the price had dropped or it was on a good sale. And you must take advantage of this sale immediately before it goes away (what is it about red and yellow colors? Marketing gurus must have figured out long ago that human hearts will start racing at the sight of exclamation points, the color red, and words in ALL CAPS).

And I felt good about myself for spotting a deal. But then I rounded out my shopping at one of the warehouse food places (Costco, Sam’s Club, etc.), and saw that their pineapple price was almost $3 less than what I had paid. Argh. So annoying, I practically felt like I’d been hoodwinked.

Is this a peacock, or a statue of a peacock or something else entirely?

Is this a peacock, or a statue of a peacock or something else entirely?

That’s what it’s like for this month’s scam: you get an automated call saying that such and such “recovery group” or “agency” is going to take legal action against you if you don’t give up some kind of personal information, or better yet, your payment information. And that things will get much more dire for you if you don’t just do what they say.

You take the time to look them up online, and see that they have a website, and a phone number that someone answers on the other line. They seem legit. But are they?

Maybe, maybe not. Here are three information-seeking tips I have for making sure these “recovery groups” are truly legitimate debt collectors:

  1. Look at their address on Google maps, especially Google street view. They may have an address, but when you look it up on a map (especially if you can get street view), does it look like a business or just a mail drop off location?
  2. This isn’t a hard and fast rule, but look to see where they are located. For some reason, a lot of bogus debt collectors are based in the New York area, especially Buffalo, NY. Read Bad Paper, by Jake Halpern, if you don’t believe me.
  3. Finally, look beyond the first link Google pulls up for you when you search this business. Yes, they might have a website and a phone number that looks credible, but that doesn’t mean you should give them your credit card information. Often times, they have scammed others and their phone numbers or other business information have been posted on websites in an attempt to alert others.

Now that I think about it, comparing price-gouging on pineapples isn’t nearly the same as getting scammed and harassed by bogus debt collectors. But I was pretty frustrated with my less-than-bargain pineapple and needed to vent.

Disputing Debt Collections

Have you ever seen those billboards that say something along the lines “Would you take advice from your bowling buddies on how to declare bankruptcy? Probably not. So why would you listen to them when planning your financial future?” Or something along those lines. The point? There is always a lot of chatter between friends, acquaintances, co-workers, neighbors, family members, and your mail man. Some of this chatter is interesting information, some of it is helpful suggestions, and some is just plain bad advice.

Naturally, if it’s a legal issue, you should definitely consult an attorney. Just like if your tooth hurts, you don’t see your grandma about it (unless she’s your dentist).

Do you ask for advice on how to mow your lawn? I wish my neighbors would, their lawn is a disaster.

Do you ask for advice on how to mow your lawn? I wish my neighbors would, their lawn is a disaster.

I’m taking a while to get to the subject of this post: there is a LOT of information out there (both online and offline) about disputing debt collections, and not all of it that great.

Let’s clear the air on disputing debt collections.

First, what does it mean to “dispute” a debt collection?

I think of “disputing” a debt collection in two parts:

(1) The first phone call you receive from the debt collector (“What the $&%* are you talking about and how did you get my phone number??” type of dispute), and

(2) A written document you send to a collection agency after you’ve gotten over your initial shock, rage, embarrassment, and frustration with the phone calls.

When on the phone, try to talk as calmly and matter-of-factly with the caller as possible. Here’s a checklist for phone calls:

  • DO get the collection agency’s name, address, and phone number
  • DON’T provide any additional information to the caller, if they are legit, they should have all the relevant information they need.
  • DO ask for a VALIDATION NOTICE from the collection agency. This is a written notice that the collection agency must provide on request that gives you the amount of the debt they are trying to collect on, the name of the original creditor, and what to do if you don’t think you owe the debt. This is a very important step, don’t forget it when you’re rage-fuming on the phone with the debt collector.

When disputing a debt collection by written document, keep these two things in mind:

  • Be specific about why you don’t think you owe this debt (usually because they’ve tacked on interest and other fees that weren’t part of the original debt).
  • Don’t provide additional personal information than what they already have.

Above all, whether by phone or in writing, DO NOT pay the debt without getting validation that the amount is truly what you owe. There’s no reason not to postpone paying it until you can be sure it really is yours to pay.

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.

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.

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