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.

Are you part of this class action?

I talked about this great decision by Judge Bataillon in an earlier post here.

But I figured with the recent certification of the class by the new federal judge, Judge Rossiter, the case merited another round of hearty applause.

Judge Rossiter recently approved the plaintiffs’ motion for class certification, and for preliminary approval of a class action settlement. What does this mean? Basically, it means that the court and the parties have agreed to parameters for defining what consumers are included in the class action and what the terms of settlement will be.

Here are the parameters (see if they apply to you):

  1. Must have an address in Nebraska;
  2. Credit Management Services served a county court complaint on you after January 1, 2008 (NCPA), or after December 18, 2010 (FDCPA);
  3. CMS’ complaint asked for attorneys fees and prejudgment interest and costs;
  4. CMS did not provide you notice of the claim 90 days before filing the county court complaint; and
  5. CMS’ complaint was an effort to collect a debt.

As ordered by the court, CMS will pay $198,000.00 into the settlement fund, to be disbursed to persons who fall into this class of consumers. CMS is also ordered by the court to distribute notices by postcard to anyone who may have been affected by this decision, so if you think you fall into this category, keep your eyes peeled when looking through your mail.

In order to be part of the class, you have to fill out a claim form. I believe the court said individuals who may be part of this class have 60 days from the day the notification postcards are mailed out to fill out a claim and become part of the class.

Again, kudos to Pam Car, attorney in Omaha, for her great work on behalf of Nebraska consumers.

What Debt Collectors Can’t Do….#3

For #2, go here.

For #1, go here

This time around in our “what debt collectors can’t do” series, let’s talk about when player 3 enters the game. For all of you non-video gamers, you are Player 1, debt collector is Player 2, and any third party is Player 3. There are a series of prohibitions in 15 U.S.C. 1692b concerning what debt collectors can’t do if they communicate with third parties. Here’s a brief check list of prohibitions in that section:

  • Failing to identify themselves as a debt collector;
  • Stating to a third party that the consumer owes any debt;
  • Contacting a third party more than once, unless requested to do so;
  • Using postcards;
  • Using language or symbols on any envelope or communication indicating debt collection business;
  • Contacting a third party after knowing the consumer is represented by an attorney.

But hold up, wait a minute. Does my dog count as a third party? Uh, no. Here’s the specific language describing what a third party is:

“Any debt collector communicating with any person other than the consumer…”

So not my dog. But definitely your neighbor, boss, spouse, girlfriend, boyfriend, friend you are only friends with on facebook and don’t talk in real life, sister, brother, nephew, niece, aunt, uncle, grammy, grampa, and even your kids.

In an effort to be even more exhaustive in my list making, here’s a list of third parties a debt collector CAN contact when trying to collect a debt:

  • The consumer
  • The consumer’s attorney
  • A consumer reporting agency (if permitted by local law)
  • The creditor
  • The creditor’s attorney
  • The debt collector’s attorney

Anyone else, and the debt collector better have prior specific permission from the consumer or local court OR only be seeking location information for the consumer from a third party. Location information means basically the contact information for the consumer, like address and telephone number. And this statute also specifically includes “employer information” as part of the “location information” that a debt collector may seek from a third party.

Improving the Debt Collection Market for Consumers

In a recent press release, the Consumer Financial Protection Bureau announced that it is considering a proposal to strengthen protections for consumers in the debt collection market. Its reasons for turning a magnifying glass to the debt collection industry have to do with how many complaints the CFPB has received, and how many consumers are likely to be affected at one point or another with a call from a debt collector.

Read the CFPB’s article here.

The CFPB noted that the bulk of the complaints it receives has to do with debt collectors calling consumers about debts that were already paid off, discharged in bankruptcy, or wasn’t their debt in the first place. Not surprising there.

Sometimes it seems like the CFPB is more awestruck with the highest number it can boast on its website – like telling us that more than 70 million consumers were contacted by a debt collector within the past year. Or that, because of CFPB’s enforcement actions against creditors and debt collectors, they’ve gotten hundreds of millions of dollars refunded to consumers.

That’s great and all, but what are they proposing to do about tightening up the debt collection industry? Turns out, the million dollar numbers the CFPB likes to brag about is a lot more concrete than the proposals of tightening up the debt collecting industry:

  1. Capping collector contact attempts;
  2. Making sure that companies collect the correct debt – which means collectors would have to have more information and more accurate information on debtors before they start collecting;
  3. Collection companies would have to make it easier for consumers to dispute a debt.

I understand and really appreciate what the CFPB is trying to do here. But what I’d like to see more of is hard and fast rules about how many “contact attempts” are too many, and exactly how much information is enough to move forward with collecting a debt. It’s not surprising at all to me that the bulk of complaints the CFPB receives is about debt collectors – it’s a tough and underhanded business meant to make the consumer feel bad, confused, and frustrated.

Indeed, the CFPB notes, like the Bad Paper book, that often the original creditor only gives names and debt amounts to a debt collector, in exchange for a nominal sum of money for each account. Given how loose and fast the original creditor and debt collectors play with consumers’ information, I’m surprised there aren’t more complaints filed with the CFPB.

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 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.

#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?